INSURANCE LAW

COURSE OUTLINE
First Semester, AY 2018-2019

I. General

A. Concept, purpose, history

B. Contract of insurance
Sec. 2(a), Insurance Code (the “Code”)1

C. Nature, characteristics, distinguishing elements of an insurance contract

1. Fields/classifications, de Leon, pages 34-45

2. Characteristics, de Leon, pages 19-232
3. Risk distribution device, de Leon, pages 24-33
4. Distinguishing/essential elements
Gulf Resorts v. Philippine Charter Ins., GR 156167, 16 May 2005
Philamcare Systems, Inc., GR No. 125678, 18 March 2002

D. Applicability of the Civil Code

1. Requisites for a valid contract under Civil Code

Articles 1318, 1319, 1347, 1353, Civil Code
Enriquez v. Sun Life Assurance, GR 15895, 29 Nov. 1920
Perez v. CA, GR 112329, 28 January 2000
De Lim v. Sun Life of Canada, GR 15774, Nov. 29, 1920
Musngi v. West Coast Life, GR 41794, 30 Aug. 1935

2. Civil Code provisions on insurance

Art. 2011, 2012, Civil Code
Art 739, Civil Code
Insular Life v. Ebrado, GR 44059, 28 October 1977
Zenith Insurance v. CA, GR 85296, 14 May 1990

E. The Business of insurance

Sec. 2(b), Insurance Code
White Gold Marine v Pioneer Insurance, GR 154514, 28 July 2005
Philamlife v Ansaldo, GR 76452, 26 July 1994

F. Construction of insurance contracts

De Leon, pages 45-58

1. Contract of adhesion

1
RA 10607 adopts amendments to PD 612 (as amended). References to sections in this Outline are to
sections of the Insurance Code as amended by RA 10607.

2
Principal reference will be De Leon, Insurance Code of the Philippines Annotated, 2014 (11 th) Edition. Page
references are to the 2014 Edition.
 2

Art. 1377, Civil Code

Rizal Surety & Insurance v CA, GR 112360, 18 July 2000
Landicho v GSIS, GR L-28866, 17 March 1972
Fieldmen’s Insurance v Vda. De Songco, GR L-24833, 23 September 1968

2. Where there is ambiguity or doubt

De Leon, pages 45-55
Del Rosario v Equitable Insurance, GR L-16215, 29 June 1963
Taurus Taxi v Capital Insurance, GR L-23491, 31 July 1968
CCC Insurance v CA, 19 GR L-25920, 19 January 30, 1970
Villacorta v Insurance Commission, GR L- 54171, 28 October 1980
Association of Baptists v Fieldmen’s Insurance, GR L-28772, 21 Sept. 1983
Fortune Insurance v CA, GR 115278, 23 May 1995
Del Rosario v. Equitable Insurance and Casualty, GR L-16215, 29 June 1963
Verendia v CA, GR 75605, 22 January 1993
Qua Chee Gan v Law Union and Rock Insurance, GR L-4611, 17 Dec. 1955
Paramount Insurance v Spouses Remondeulaz, G.R. No. 173773, 28 Nov. 2012

Meaning of accident
Calanoc v CA, GR 8151, 16 December 1955
Biagtan v Insular Life, GR L-25579, 29 March 1972
Finman General Assurance v CA, GR 100970, 2 September 1992
De la Cruz v. Capital Insurance, GR L-21574, 30 June 1966
Sun Insurance Office Ltd v CA, GR 92383, 17 July 1992

3. Where the terms of the contract are clear

De Leon, pages 55-58
Art. 1370, Civil Code
Misamis Lumber v Capital Insurance, GR L-21380, 20 May 1966
New Life Enterprises v CA, Equitable Insurance, GR 94071, 31 March 1992
Ty v Filipinas Cia de Seguros, GR L-21821-22 and L-21824-27, 31 May 1966

4. Contract “uberimae fidae”: perfect good faith3

Qua Chee Gan v Law Union and Rock Insurance, GR L-4611, 17 December 1955
Velasco v Apostol & Maharlika Insurance, GR L-44588, 9 May 1989

G. Subrogation
Article 2207, Civil Code
De Leon, pages 8-13
Fireman’s Fund et al v Jamila et al., GR 27427, 7 April 1976
Philippine American General Insurance v CA, GR 116940, 11 June 1997
Delsan Transport v CA, GR 127897, 15 November 2001
Pan Malayan Insurance v CA, GR 81026, 3 April 1990
SverigesAnfartygs Assurance v Qua Chee Gan, L-22146, 5 Sept 1967
Rizal Surety v Manila Railroad, GR L-24043, 25 April 1968
St. Paul Fire v Macondray, GR L-27796, 25 March 1976
National Union Fire Insurance v. Stolt Nielsen, GR 87958, 26 April 1990
Cebu Shipyard v William Lines, GR 132607, 5 May 1999

3 Case under this topic will not be recited. Where a case in this part of the outline is listed under other topics,
they will be recited under that topic.
 3

Manila Mahogany v CA, GR L-52756, 12 October 1987

Danzas Corporation v Abrogar, G.R. No. 141462, 15 December 2005
F.F. Cruz v CA, GR L-52732, 29 August 1988
Aboitiz Shipping v Insurance Company of North America, GR 168402, 6 Aug. 2008

H. The Business of Insurance

Section 2(2), Code
De Leon, pages 59-61
White Gold Marine v Pioneer Insurance, GR 154514, 28 July 2005
Philamlife v Ansaldo, GR 76452, 26 July 1994
Philippine Health Care Provider v Commissioner of Internal Revenue, GR 167330, 18
September 2009

II. Contract of insurance

A. What is an insurance contract: Sec. 2, Code

B. Requisites of contract of insurance – see Part I(C) and (D), page 1 of this Outline

C. What may be insured

Sections 3, 4, 5, Code
De Leon, pages 65-73

D. Parties to insurance contracts

1. Who may be an insurer

Sec. 6, Code
De Leon, pages 74-77

2. Who may be insured

Sec. 7 Code
De Leon, pages 77-80
Filipinas Cia. De Seguros v Christern Huenefeld, GR L-2294, 25 May1951
Constantino v Asia Life, GR L-1669, 31 August 1950
Fidela Sales Gonzaga v Crown Life, GR L-4197, 20 March 1957

3. Mortgagor/mortgagee
Sec. 8 and 9, Code; Sec. 13 and 53, Code
De Leon, pages 80-88
Palileo v Cosio, GR L-7667, 28 November 1955
San Miguel Brewery v Law Union, GR L-14300, 19 January 1920
Geagonia v. CA, GR 114427, 6 February 1995
Saura Import & Export v Phil Int’l Surety, GR L-15184, 31 May 1963
Phil. National Bank v CA, GR L-57757, 31 August 1987

E. Insurable interest

1. Meaning, necessity for insurable interest

De Leon, pages 89-91
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2. Insurable interest in life insurance

Sec. 10, 19, 184, Code
De Leon, pages 89-101
El Oriente v Posadas, GR 34774, 21 September 1931

3. Beneficiaries
Sections 11 and12, IC
Art. 2012 and 739, Civil Code
De Leon, pages 101-114
Insular Life v Ebrado, GR L-44059, 28 October 1977
Vda. De Consuegra v GSIS, GR L-28093, 30 January 1971
Southern Luzon Employees v Golpeo, GR L-6114, 30 October 1954
Heirs of Maramag v Maramag, GR 181132, 5 June 2009
Philamcare v CA, GR 125678, 18 March 2002

Sec. 182, Code

Villanueva v Oro, GR L-2227, 31 August 1948

4. Insurable interest in property insurance

Sections 13 to 18, Code; Section 25, Code
De Leon, pages 114-125
Harvardian College v Country Bankers, CA CV 03771, 6 Jan. 6, 1986, 1 CARA 1
Commercial Union Assurance v. Lepanto, GR L-52027, 27 April 1982
Harding v Commercial Union, GR L-12707, 10 August 1918
Lampano v Jose, GR L-9401, 30 March 1915
Gaisano v Insurance Co. of North America, GR 147839, 8 June 2006
Ong Lim Sing, Jr. v FEB Leasing, GR 168115, 8 June 2007
Traders Insurance v Golangco, GR L-6442, 21 September 1954
Lopez v del Rosario, GR L-19189, 27 November 1922
San Miguel v Law Union Rock Insurance, GR L-14300, 19 Jan.1920
Spouses Cha v Court of Appeals, GR 124520, 18 August 1997
Garcia v Hong Kong Fire & Marine Insurance, GR 20341, 1 Sept 1997

5. When insurable interest must exist; transfers of interest

Sections 19, 20, 21, 22, 23, 24, 25, Code
De Leon, pages 125-135
Tai Tong Chuache v Insurance Comm, GR L-55397, 29 February 1988
Bachrach v British American Insurance, L-5715, 20 December 1910
San Miguel v Law Union Rock Insurance, GR L-14300, 19 January 1920

F. Concealment and Representation

1. Concealment
Sections 26-35, Code
De Leon, pages 136-154
Argente v West Coast Life, GR L-24899, 9 March 1928
Great Pacific Life v CA, GR L-31845, 30 April 1979
Saturnino v Philippine American Life, GR L-16163, 28 February 1963
Canilang v CA and Great Pacific Life, GR 92492, 17 June 1993
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Sun Life v Bacani, GR 105135, 22 June 1995

Philamcare Health Systems v CA, GR 125678, 18 March 2002
Yu Pang Cheng v CA, GR L-12465, 29 May 1959
Colado v Insular Life, 51 O.G. (No. 12), 1955

2. Representation
Sections 37-48, Code
De Leon, pages 155-171
Edillon v Manila Bankers Life, GR L-34200, 30 September 1982
Insular Life v Feliciano, GR L 47593, 13 Sept 1941; Insular Life v Feliciano, GR
47593, 29 December 1943
Ng Zee v Asian Crusader Life Insurance, GR L-30685, 30 May 1983
Great Pacific Life Assurance v Court of Appeals, GR 113899, 13 Oct 1999
Tan Chay Heng v West Coast Life, GR L-27541, 21 Nov. 1927

3. Incontestability Clause
Sec. 48, Code
De Leon, pages 171-176
Tan v Court of Appeals, GR 48049, 29 June 1989
Manila Bankers Life v Aban, G.R. 175666, 29 July 2013
Sun Life of Canada v Sibya, GR 211212, 8 June 2016

G. The Policy

1. Form, contents, cover notes

Sections 49-52; Sec. 232, Code
De Leon, pages 177-207
Mandatory provisions
 Sec. 233, IC (individual life insurance policies)
 Sec. 234, IC (mandatory provisions - group life insurance policy)
 Sec. 236, 237, IC (mandatory provisions - industrial life insurance)
Rizal Commercial Banking v CA, GR 128833, 20 April 1998
Great Pacific Life CA, GR L-31845, 30 April 1979
Tang v CA, GR L-48563, 25 May 1979
De Lim v Sun Life of Canada, GR 15774, 29 Nov 1920

2. Terms of the contract constitute measure of insurer's liability; compliance a condition

precedent to the insured's right of recovery
Stokes vs. Malayan Insurance Co., Inc., L-34768, February 28, 1984
Perla Compania de Seguros, Inc. v.CA, G.R. No. 78860, May 28, 1990
Pacific Banking v CA, GR L-41014, 28 November 1988
Perez v CA, GR 112329, 28 January 2000
Oriental Assurance v CA, GR 94052, 9 August 1991
Alpha Insurance v Castor, GR 198174, 02 September 2013

3. Persons entitled to recover on policy

Sections 53-58, Code
De Leon, pages 208-213
Bonifacio Brothers v Mora, GR L-20853, 29 May 1967
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Heirs of Maramag v Maramag, GR 181132, 5 June 2009

Vda de Consuegra v GSIS, GR L-28093 January 30, 1971
Coquia v Fieldmen’s Insurance, GR L-23276, 29 November 1968
Rizal Commercial Banking v CA, GR 128833, 20 April 1998

4. Types of Policy
Sections 59-62, Code
De Leon, pages 213-217
Development Insurance v. IAC, GR 71360, 16 July 1986

5. Period to bring action

Section 63, Code
De Leon, pages 217-221
Ang v Fulton Fire Insurance, GR L-15862, 31 July 1961
New Life Enterprises v CA, GR 94071 March 31, 1992
ACCFA v Alpha Insurance, GR L-24566, 29 July 1968
Ang v Fulton Fire Insurance, GR L-15862, 31 July 1961
Sun Insurance CA, GR 89741; 13 March 1991
Pacific Banking v CA, GR L-41014, 28 November 1988
Mayer Steel Pipes v CA, GR 124050, 19 June 1997

6. Cancellation of policy; notice

Sections 64-66, Code
De Leon, pages 221-225
Saura Import & Export v Phil Int’l Surety, GR L-15184, 31 May 1963
Malayan Insurance v Cruz-Arnaldo, GR L-67835, 12 October 1987

H. Warranties
Sections 67-76, Code
De Leon, pages 226-243
Sta. Ana v Commercial Union Insurance, GR L-32889, 20 Nov. 1930
Ang Giok Chip v Springfield Fire & Marine, GR L-33637, 31 December 1931
Young v Midland Textile, GR L-9370, 31 March 1915
American Home Assurance v Tantuco, GR 138941; 6 October 2001
Qua Chee Gan v Law Union & Rock Insurance, GR L-4611, 17 Dec. 1955
Fieldman’s Insurance v Songco, GR 24833, 23 September 1968
Pioneer Insurance v Yap, GR L-36232, 19 Dec. 1974
Prudential Guarantee v Trans Asia, GR 151890, 20 June 2006
General Insurance v Ng Hua, GR L-14373, 30 January 1960

I. Premium
Sections 77-84, Code
De Leon, pages 244-281
Arce v Capital Insurance, GR L-28501, 30 September 1985
Philippine Phoenix v Woodworks, GR L-25317, 6 August 1979 – differentiate ruling in
Philippine Phoenix v Woodworks, GR L-22684, 31 August 1967
Makati Tuscany v CA, GR 95546, 6 November 1992
Tibay v CA, GR 119655, 24 May 1996
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UCPB General v Masagana Telamart, GR 137172, 4 April 2001 (reversing Decision

dated 15 June 1999)
American Home Ins. v Chua, GR 130421, 28 June 1999
Great Pacific Life v CA, GR 57308, 28 April 1990
Jaime T. Gaisano v Development Insurance & Surety, GR190702, 27 February 2017

J. Loss, Notice and Proof of Loss

1. Loss
Sections 85-89, Code
De Leon, pages 284-295

a) Transfer of claim after loss – Sec. 85, Code

b) Proximate cause is peril insured against – Sec. 86, Code
Hostile fire v. friendly fire
c) Extension of principle of proximate cause – Sec. 87, Code
d) Willful act of insured; negligence of insured – Sec. 89, Code

Paris-Manila Perfume v Phoenix Assurance, GR L-25845, 17 Dec 1926

Prats v Phoenix Assurance, GR L-28607, 21 February 1929
Country Bankers v Lianga Bay Multipurpose, GR 36914, 25 January 2002
Heirs of Coscolluela v Rico General, GR 84628, 16 Nov. 1989
FGU Insurance v CA, GR 137775, 31 March 2005
East Furniture v Globe & Rutgers Fire, L-35848, 22 Nov. 1932
DBP Pool of Accredited Insurance Companies v Radio Mindanao Network,
GR 147039, 27 January 2006

2. Notice and proof of loss

Sections 90-94, Code
De Leon, pages 296-306
Vda. de Gabriel v CA, GR 103883, 14 November 1996
Malayan Insurance v Cruz Arnaldo, GR L-67835, 12 October 1987
Yu Ban Chan v Fieldmen’s Insurance, GR L-19851, 29 June 1965
Go Lu v Yorkshire Insurance, G.R. No. L-18090, 25 July 25 1922
Pacific Banking v CA, GR L-41014, 28 November 1988
Pacific Timber v CA, GR L-38613, 25 February 1982
Phil. Charter Ins. v Chemoil Lighterage, GR 136888, 29 June 2005
Finman General Assurance v CA, GR 138737, 12 July 2001

Sec. 397, Code

Vda. De Gabriel v CA and Fortune Insurance, GR 103883 14 November 1996

K. Double Insurance
Sections 95-96, Code
De Leon, pages 307-314
Geagonia v CA, GR 114427, 6 February 1995
Pacific Bank v CA, L-41014, 28 November 1988
Sta. Ana v Commercial Union Insurance, GR L-32889, 20 Nov. 1930
Pioneer Insurance v Yap, L-36232, 19 December 1974
New Life Insurance v CA, GR 94071, 31 March 1992
Emilio Gonzalez La O v Yek Tong Lin, GR L-33131, 13 Dec. 1930
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General Insurance v Ng Hua, GR L-14373, 30 January 1960

Union Manufacturing v Philippine Guaranty, GR L-27932, 30 October 1972

L. Reinsurance
Sections 97-100, Code
De Leon, pages 315-325
Fieldmen’s Insurance v Asian Surety, L-23447, 31 July 1970
Pioneer Insurance v CA, GR 84197, 28 July 1989
Gibson v Revilla, GR L-41432, 30 July 1979
Artex Development v Wellington Insurance, GR L-29508, 27 June 1973

III. Marine Insurance

A. Scope
1. What marine insurance includes
Section 101, Code
De Leon, pages 326-329

2. Risks covered
De Leon, pages 329-339
Roque v IAC, GR L-66935 November 11, 1985
La Razon Social Go Tiaoco v Union Insurance, GR 13983, 1 S ep. 1919
Delsan Transport v CA, GR 127897, 15 November 2001
Choa Tiek Seng v CA & Filipino Merchants, GR 84507, 15 March 1990
Filipino Merchants v CA & ChoaTiekTeng, GR 85141, 28 Nov. 1989
Cathay Insurance v CA, GR 76145, 30 June 1987

B. Insurable interest in marine insurance

Sections 102-108, Code
De Leon, pages 339-349

Caltex Phil v Sulpicio Lines, GR 131166, 30 Sept. 1999 (re charter)

San Miguel v Heirs of Inguito, GR 141716, 4 July 2002 (re charter)

C. Concealment and representation in marine insurance

Sections 109-112, Code
Sec. 113-114, Code
De Leon, pages 349-354

D. Implied warranties

1. Seaworthiness
Sections 115-121, Code
De Leon, pages 354-364
Philippine American General Ins. v CA, 116940, 11 June 1997
Caltex Phil v Sulpicio Lines, GR 131166, 30 September 1999
Delsan Transport v CA, GR 127897, 15 November 2001
Madrigal v Hanson, GR L-6106-07, 18 April 1958
Roque v IAC, GR L-66935, 11 November 1985
San Miguel Corporation v Heirs of Inguito, GR 136054, 5 Sept. 2001
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2. To carry requisite documents where nationality expressly warranted

Section 122, Code
De Leon, pages 364-365

3. Against deviation
Sections 123-128, Code
De Leon, pages 365-368

E. Loss in marine insurance

Sections 129-139, Code
De Leon, pages 369-379

1. Loss
a) Partial or total
b) Total loss
(i) Actual total loss
(ii) Constructive total loss
c) Liability of insurer in case of reshipment
d) Average
(i) Gross or general average
(ii) Simple or particular average

Philippine Manufacturing v Union Insurance, GR L-16473, 22 Nov 1921

Malayan v CA, GR 119599, 20 March 1997
Pan Malayan v CA, GR 95070, 5 September 1991
Philippine American General Ins. v CA, 116940, 11 June 1997 (limited liability)
Manila Steamship v Insa Abdulhaman, GR L-9534, 29 Sep 1956 (limited liability)
Philippine Home Assurance v CA, GR 106999, 20 June 1996 (average)
Jarque v Smith Bell, GR L-32986, 11 November 1930 (average)

F. Abandonment
Sections 139-155, Code
De Leon, pages 379-391
Oriental Assurance v CA, GR 94052, 9 August 1991

G. Measure of indemnity in marine insurance

Sections 158-166, Code
De Leon, pages 391-401
Co-insurance – Sec. 159

IV. Fire Insurance

Sections 169-175, Code
De Leon, pages 402-416
Philippine Home Assurance v CA, GR 106999, 20 June 1996
Bachrach v British American Assurance, GR L-5715, 20 Dec. 1910
Ong Guan Can v Century Insurance, GR L-21196, 6 February 1924
Galian v State Assurance, GR L-8405, 10 February 1915
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V. Casualty Insurance
Section 176, Code
Sections 386 to 402, Code, on Compulsory Motor Vehicle Liability Insurance
Sec. 391, Code – No fault indemnity
De Leon, pages 417-434; pages 737-756

Coquia v Fieldmen’s Insurance, GR L-23276, 29 November 1968

First Integrated Bonding v Hernando, GR 51221, 31 July 1991
Pan Malayan Insurance v CA, GR 81026, 3 April 1990
Malayan Insurance v CA and Vallejos, et al., GR L-36413, 26 Sept. 1988
Vda de Maglana v Consolacion, GR 60506, 6 August 1992
GSIS v CA, GR 101439, 21 June 1999
Shafer v RTC Judge, GR 78848, 14 November 1988
Guingon v Del Monte, GR L-22042, 17 August 1967
Perla Cia v Ancheta, GR L-49699, 8 August 1988
Villacorta v Insurance Commission, GR 54171, 28 October 1980
Palerno v Pyramid Insurance, L-36480, 31 May 1988
Tanco v Philippine Guaranty Company, GR L-17312, 29 November 1965
Travellers Insurance v CA, GR 82036, 22 May 1997
Fortune Insurance v CA, GR 115278, 23 May 1995

Review cases on meaning of accident

Calanoc v CA, GR 8151, 16 December 1955
Biagtan v Insular Life, GR L-25579, 29 March 1972
Finman General Assurance v CA, GR 100970, 2 September 1992
De la Cruz v. Capital Insurance, GR L-21574, 30 June 1966
Sun Insurance Office Ltd v CA, GR 92383, 17 July 1992

VI. Suretyship
Sections 177-180, Code
De Leon, pages 435-446
National Power Corporation v CA, GR L-43706 14 November 1986
Leyson v Rizal Surety, GR L-21250, 31 March 1966
Philippine Pryce Assurance v. CA, GR 107062, 21 February 1994
AFP General Insurance v. Molina, GR 151133, 30 June 2008
Capital Insurance v. Ronquillo Trading, GR L-36488, 25 July 1983

VII. Life Insurance

Art. 2021-2023, Civil Code
Sections 181-186, Code
De Leon, pages 447-465
A. Definition; nature
B. Parties involved
C. Distinguished from fire and marine insurance
D. Exemption from execution
E. Kinds of life insurance policies
F. Suicide
G. Mandatory provisions in individual life policies - Section 233, Code
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Gallardo v Morales, GR L-12189, 29 April 1960

Sun Life v Ingersoll, GR 16475, 8 November 1921

VIII. Other provisions

A. Claims settlement
Sections 247-251, Code
Cathay Insurance v CA, GR 85624, 5 June 1989
Zenith Insurance v. CA, GR 85296, 14 May 1990
Tio Khe Chio vs. CA, GR 76101-02, 30 September 1991

B. Jurisdiction of Insurance Commission to adjudicate claims

Section 439, Code

C. Mutualization
Section 268, Code
Republic v Sun Life, G.R. No. 158085, 14 October 2005

D. Insurance agents and brokers

Sections 307, 308, 309, Code – Insurance agent
Sections 310-311, Code – insurance brokers

E. Adjusters – Sec. 332, Code

Actuary – Sec. 344, Code

F. Bancassurance – Sec. 375-377, Code

G. Micro insurance – Section 187, Code

H. Variable contracts – Section 238, Code