INSURANCE

2013
Benny applied for life insurance for Php 1.5 Million. The insurance company approved his application and
issued an insurance policy effective Nov. 6, 2008. Benny named his children as his beneficiaries. On April 6,
2010, Benny died of hepatoma, a liver ailment.

The insurance company denied the children's claim for the proceeds of the insurance policy on the ground that
Benny failed to disclose in his application two previous consultations with his doctors for diabetes and
hypertension, and that he had been diagnosed to be suffering from hepatoma. The insurance company also
rescinded the policy and refunded the premiums paid.
Was the insurance company correct? (8%)


Stable Insurance Co. (SIC) and St. Peter Manufacturing Co. (SPMC) have had a long-standing insurance
relationship with each other; SPMC secures the comprehensive fire insurance on its plant and facilities from
SIC.

The standing business practice between them has been to allow SPMC a credit period of 90 days from the
renewal of the policy within which to pay the premium. Soon after the new policy was issued and before
premium payments could be made, a fire gutted the covered plant and facilities to the ground. The day after the
fire, SPMC issued a manager's check to SIC for the fire insurance premium, for which it was issued a receipt; a
week later SPMC issued its notice of loss. SIC responded by issuing its own manager's check for the amount
of the premiums SPMC had paid, and denied SPMC's claim on the ground that under the "cash and carry"
principle governing fire insurance, no coverage existed at the time the fire occurred because the insurance
premium had not been paid.

Is SPMC entitled to recover for the loss from SIC? (8%)
4. Where a credit term was agreed upon like the agreement in UCPB General Insruance,
Inc. v. Masagana Telemart where the insurer granted a 60-90-day credit term for the
payment of the premiums despite full awareness of Section 77.

While the import of Section 77 is that prepayment of premiums is strictly required as a condition to the validity of
the contract, We are not prepared to rule that the request to make installment payments duly approved by the
insurer would prevent the entire contract of insurance from going into effect despite payment and acceptance of
the initial premium or first installment. Section 78 of the Insurance Code in effect allows waiver by the insurer of
the condition of prepayment by making an acknowledgment in the insurance policy of receipt of premium as
conclusive evidence of payment so far as to make the policy binding despite the fact that premium is actually
unpaid. Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not
paid, but does not expressly prohibit an agreement granting credit extension, and such an agreement is not
contrary to morals, good customs, public order or public policy (De Leon, The Insurance Code, p. 175). So is an
understanding to allow insured to pay premiums in installments not so prescribed. At the very least, both parties
should be deemed in estoppel to question the arrangement they have voluntarily accepted.


XIII. In 2010, the Philippine National Police declared Kaddafy Benjelani "Public Enemy No. 1" because of his
terrorist activities in the country that have resulted in the death of thousands of Filipinos. A ransom of P15
million was placed on Kaddafy Benjelani's head.

Worried about the future of their family, Kaddafy Benjelani's estranged wife, Aurelia, secured in December
2010 a life insurance policy on his life and designated herself as the beneficiary.
Is the policy valid and binding? (1%)

(A) Yes, the policy is valid and binding because Aurelia has an insurable interest on the life of Kaddafy
Benjelani.
(B) No, the policy is not valid and binding because Kaddafy Benjelani has been officially declared a public
enemy.
(C) Yes, the policy is valid and binding because it has been in force for more than two years.
(D) No, the policy is not valid and binding since the spouses' estrangement removed Aurelia's insurable
interest in Benjelani's life.
(E) None of the above.


Public enemy citizen or subject of a nation at war with the Philippines. Does not include
robbers, thieves, criminals. - a private corporation may be deemed an enemy corporation if controlled
by enemy aliens.

2009

Antarctica Life Assurance Corporation (ALAC) publicly offered a specially designed insurance policy covering
persons between the ages of 50 to 75 who may be afflicted with serious and debilitating illnesses. Quirico
applied for insurance coverage, stating that he was already 80 years old. Nonetheless, ALAC approved his
application. Quirico then requested ALAC for the issuance of a cover note while he was trying to raise funds to
pay the insurance premium. ALAC granted the request. Ten days after he received the cover note, Quirico had
a heart seizure and had to be hospitalized. He then filed a claim on the policy.

a. Can ALAC validly deny the claim on the ground that the insurance coverage, as publicly offered, was
available only to persons 50 to 75 years of age? Why or why not? (2%)
b. Did ALACs issuance of a cover note result in the perfection of an insurance contract between Quirico and
ALAC? Explain. (3%)

2012

1. An Insurance Contract is a contract of adhesion, which means that in resolving ambiguities in
the provision of the insurance contract, -
a. the general rule is that, the insurance contract is to be interpreted strictly in
accordance with what is written in the contract.
b. are to be construed liberally in favor of the insured and strictly against the insurer
who drafted the insurance policy.
c. are to be construed strictly against the insured and liberally in favor of the insurer.
d. if there is an ambiguity in the insurance contract, this will invalidate the contract.




30. An insurance contract is an aleatory contract, which means that

a. the insurer will pay the insured equivalent to the amount of the premium paid.
b. the obligation of the insurer is to pay depending upon the happening of an uncertain future event.
c. the insured pays a fixed premium for the duration of the policy period and the amount of the
premiums paid to the insurer is not necessarily the same amount as what the insured will get upon the
happening of an uncertain future event.
d. the obligation of the insurer is to pay depending upon the happening of an event that is certain to
happen.

Ans:

Art. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves to give
or to do something in consideration of what the other shall give or do upon the happening of an
event which is uncertain, or which is to occur at an indeterminate time.


32. X is the common law wife of Y. Y loves X so much that he took out a life insurance on his own life and
made her the sole beneficiary. Y did this to ensure that X will be financially comfortable when he is gone. Upon
the death of Y, -
a. X as sole beneficiary under the life insurance policy on the life of Y will be entitled to the proceeds of
the life insurance.
b. despite the designation of X as the sole beneficiary, the proceeds of the life insurance will go to the
estate of Y.
c. the proceeds of the life insurance will go to the compulsory heirs of Y.
d. the proceeds of the life insurance will be divided equally amongst X and the compulsory heirs of Y.

Insular Life Assurance Co v Ebrado

FACTS Ebrado took out a life insurance policy and named his common-law partner, Carponia, his
beneficiary. Upon his death, his lawful wife also filed a claim w/ Insular Life as the widow. RTC
disqualified Carponia from claiming benefits under the policy

ISSUE: WON Carponia disqualified from claiming
insurance proceeds because of her illicit relation
with the insured.

HELD: YES. (SC applied CC) Since the Insurance Code does not contain any specific provision on
rules respecting who may be named beneficiary, the CC will apply. Art 2012 states that any
person forbidden from receiving donations under Art 739 cannot be named beneficiary of a life
insurance policy Art. 739 declares void donations made between persons who are guilty
of adultery or concubinage at the time of the donation. Hence, Carponia is disqualified from
being named a beneficiary.


33. X, in January 30, 2009, or two (2) years before reaching the age of 65, insured his life for Php20Million. For
reason unknown to his family, he took his own life two (2) days after his 65th birthday. The policy contains
no excepted risk. Which statement is most accurate?

a. The insurer will be liable.
b. The insurer will not be liable.
c. The state of sanity of the insured is relevant in cases of suicide in order to hold the insurer liable.
d. The state of sanity of the insured is irrelevant in cases of suicide in order to hold the insurer liable.

34. X, a minor, contracted an insurance on his own life. Which statement is most accurate?
a. The life insurance policy is void ab initio.
b. The life insurance is valid provided it is with the consent of the beneficiary.
c. The life insurance policy is valid provided the beneficiary is his estate or his parents, or spouse or
child.
d. The life insurance is valid provided the disposition of the proceeds will be subject to the approval of
the legal guardian of the minor.

35. The "incontestability clause" in a Life Insurance Policy means ---
a. that life insurance proceeds cannot be claimed two (2) years after the death of the insured.
b. that two (2) years after date of issuance or reinstatement of the life insurance policy, the insurer
cannot anymore prove that the policy is void ab initio or rescindable by reason of fraudulent
concealment or misrepresentation of the insured.
c. that the insured can still claim from the insurance policy after two (2) years even though premium is
not paid.

e. that the insured can only claim proceeds in a life insurance policy two (2) years after death.
f.
36. For both the Life Insurance and Property Insurance, the insurable interest is required to be -
a. existing at the time of perfection of the contract and at the time of loss.
b. existing at the time of perfection and at the time of loss for property insurance but only at the time of
perfection for life insurance.
c. existing at the time of perfection for property insurance but for life insurance both at the time of
perfection and at the time of loss.

d. existing at the time of perfection only.



In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue, the truth of falsity of the answers become
the determining factor. In the policy was procured by fraudulent representations, the contract of insurance apparently set forth therein was never legally existent. It can fairly be assumed that
had the true facts been disclosed by the assured, the insurance would never have been granted.