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INSURANCE CODE

Q: What is a contract of insurance?(MEMORIZE)A: A contract of insurance is an agreement whereby one undertakes to indemnify another against loss, damage or liability arising from an unknown or contingent event (Sec. 2, par. 2, ICP)

CHARACTERISTICS

(1) Insurance as a risk distributing device.(2) Contract of Adhesion or Fine Print Rule(3) Aleatory(4) Contract of Indemnity(5) Uberrimae Fides Contract(6) Personal Contract

ELEMENTS OF INSURANCE

(1) existence of an insurable interest(2) risk of loss(3) assumption of risk(4) scheme to distribute losses(5) payment of premiums

Policy of Insurance

It is a written instrument where the terms and conditions of the contract of insurance are set forth (Sec. 49, ICP)

What is a rider?

A rider is an attachment to an insurance policy that modifies the conditions of the policy by expanding or restricting its benefits or excluding certain conditions from the coverage.

Who is the insured?

The person with capacity to contract and having an insurable interest in the

life or property of the insured.

EXCEPTIONS:

(1) A public enemy may not be insured (Sec. 7, ICP) (2) Minors can no longer enter into insurance contracts.(3) Married woman can enter into insurance contracts without the assistance of their husbands.

Who is a beneficiary?

He is a person designated to receive proceeds of policy when risk attaches.

PRINCIPLE OF BENEFICIARY

The beneficiary has an insurable interest over the life and property of the insurance.

Life - The law mandates that the insurable interest of the beneficiary must be present when the insurance contract would be entered into and not necessarily when the risk insured against.

It is only the start, as a general principle that one must have insurable interest in life as well as property.

Property - The insurable interest on property should be maintained from the time the contract was entered into and in the moment of loss.

In the meantime, if the property is under the deed of sale or right to repurchase, pacto de retro, it is merely suspended.

EXCEPTION: BAR

When it is the insured that would bind this person to designate his own beneficiary.

When it is now the insured that

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designates his own beneficiary, the beneficiary need not be having insurable interest.

EXCEPTION: When it is the beneficiary who is prohibited.

Who are those not allowed to receive donation?

Persons specified in Art. 739 of the Civil Code cannot be designated:

(a) those made between persons who were guilty of adultery or concubinage at the time of donation;(b) those made between persons found guilty of the same criminal offense, in consideration thereof;(c) those made to a public officer or his wife, descendants or ascendants by reason of his office.

INSURABLE INTEREST

What is insurable interest in life?

Every person has an insurable interest in the life and health:1) of himself, of his spouse, and of his children;2) of any person on whom he depends or in part for education or support, or in whom he has a pecuniary interest;3) of any person under a legal obligation to him for the payment of money, or respecting property or services, of which death or illness might delay or prevent the performance; and4) of any person upon whose life any estate or interest vested in him depends (Sec. 10, ICP).

In what does insurable interest in property consist?

(1) Insurable interest in property is any

interest therein, or liability in respect thereof, and it may consist in an existing interest, an inchoate interest founded on an existing interest, or any expectancy coupled with an existing interest (Secs. 13 and 14, ICP).

(2) In general, a person has an insurable interest in the property, if he derives pecuniary or advantage from its preservation or would suffer pecuniary loss, damage or prejudice by its destruction whether he has or he has no title in, or lien upon, or possession of the property.

(3) Existence of insurable interest is a matter of public policy. Hence, the principle of estoppel cannot be involved.

NEGOTIABLE INSTRUMENTS LAW

Requisites of Negotiability (Sec. 1, NIL) MEMORIZE

(a) Must be in writing and signed by the maker or drawer;(b) Must contain an unconditional promise or order to pay a sum certain in money;(c) Must be payable on demand, or at a fixed or determinable future time;(d) Must be payable to order or bearer; and(e) When the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty.

KINDS OF NEGOTIABLE INSTRUMENTS

Bill of Exchange

A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring

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the person to whom it is addressed to pay on demand or at a fixed or determinable future time. (Sec. 126, NIL)

Promissory Note

A negotiable promissory note is an unconditional promise made in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer. Where a note is drawn to the maker’s own order, it is not complete untile indorsed by him. (Sec. 184, NIL)

When can a bill of exchange be treated as a promissory note?

a) The drawer and the drawee are the same person; b) The drawer is a fictitious person;c) The drawee has no capacity to contract;d) The instrument is so ambiguous that there is doubt whether it is a bill or a note.

Holder - the payee or indorsee of a bill or note who is in possession of it or the bearer thereof (Sec. 191, NIL)

REQUISITES (Sec. 52) MEMORIZE

A holder in due course is a holder who has taken the instrument under the following conditions:

1) That it is complete and regular upon its face;2) That he became the holder of it before it was overdue, and without notice that it has been previously dishonored, if such was the fact;3) That he took it in good faith and for value;

4) That at the time it was negotiated to him, he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.

RIGHTS OF A HOLDER IN DUE COURSE MEMORIZE

a) A holder in due course holds the instrument free from any defect of title of prior parties, and free from defenses available to prior parties amon themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon.

1) A holder in due course is free from personal defenses.2) A holder in due course is not free from real defenses.

b) A holder not in due course is subject to personal and real defenses.

Exception: A holder who is not a holder in due course but he derived his title from a holder in due course. (Sec. 58, NIL)

CORPORATION CODE OF THE PHILIPPINES

What is a corporation?

A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

Moral Damages

It cannot be awarded in favor of corporations because they do not have feelings and mental state. They may not even claim moral damages for

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besmirched reputation.A corporation may recover moral

damages if it “has a good reputation that is debased, resulting in social humiliation”.

A corporation can recover moral damages under Article 2219(7) if it was the victim of defamation.

Doctrine of piercing the veil of corporate entity

The doctrine that a corporation is a legal entity distinct from the persons composing it. It is a theory introduced for the purpose of convenience and to serve the ends of justice. But when the veil of corporate fiction is used as a shield to perpetuate fraud, to defeat public convenience, justify wrong or defend crime, this fiction shall be disregarded and the individuals composing it will be treated identically.

ADVANTAGES AND DISADVANTAGESMEMORIZE AT LEAST 5

ADVANTAGES

a) The capacity to act as a legal unit;b) Limitation of, or exemption from, individual liability of shareholders;c) Continuity of existence;d) Transferability of shares;e) Centralized management of board of directors; andf) Standardized method of organization, and finance.

DISADVANTAGES

a) More complicated in formation and management;b) Higher cost of formation and operation;c) Lack of personal element;d) Greater governmental control and

regulation;e) Management and control are separate from ownership; andf) Stockholders have little voice in the conduct of business.

What are the instances when non-voting (either redeemable or preferred) shares may vote? MEMORIZE

1) amendment of Articles of Incorporation;2) adoption and amendment of By-laws;3) increase or decrease of capital stock;4) sale or disposition of all or substantially all of corporate property;5) merger or consolidation of corporation;6) Investment of funds in another corporation or another business purpose; and7) corporate dissolution.