INSURANCE

1. Define Insurance.

Insurance is a contract by which one party (the insurer) undertakes to

indemnify another party (the insured) against risk of loss, damage, or liability
arising from the occurrence of some specified contingency. (Blacks Law
Dictionary 10th Edition, page 920)

The statutory definition of the contract of insurance, embodied in the first

paragraph of Section 2 of the Insurance Code, is an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event.

2. May a contract of suretyship be an insurance contract?

Yes, a contract of suretyship is also deemed an insurance contract if made

by a surety who or which is doing an insurance business. (Section 2(2) of the
Insurance Code.

3. Define the term doing an insurance business or transacting an insurance

business within the meaning of the Insurance Code.

The term doing an insurance business or transacting an insurance

business, within the meaning of the Insurance Code:

(1) Making or proposing to make, as insurer, any insurance

contract;

(2) Making or proposing to make, as surety, any contract of

suretyship as a vocation and not as merely incidental to any
other legitimate business or activity of the surety;

(3) Doing any kind of business, including a reinsurance business,

specifically recognized as constituting the doing of an insurance
business within the meaning of the Code; or

(4) Doing or proposing to do any business in substance equivalent

to any of the foregoing in a manner designed to evade the
provisions of the Code.

The fact that no profit is derived from making of insurance contracts, agreements
or transactions or that no separate or direct consideration is received shall not be
deemed conclusive to show that the making thereof does not constitute the doing
or transacting of an insurance business.
4. What is the test in order to determine whether one is engaged in insurance
business?

One test in order to determine whether one is engaged in insurance

business is whether the assumption of risk and indemnification of loss are the
principal object and purpose of the organization or whether they are merely
incidental to its business. If these are principal objectives the business is that of
insurance. But if they are merely incidental and service is the principal purpose,
then the business is not insurance.(Philippine Health Care Providers vs.
Commissioner of Internal Revenue, G.R. No. 167330, September 18, 2009)

5. What are the laws governing insurance contract?

In Paz Lopez De Constantino vs. Asia Life Insurance Company, G.R. No.
L-1669, August 31, 1950, the laws governing insurance in the order of priority
are:

(1) The Insurance Code, as amended by Republic Act No. 10607

on August 15, 2013;

(2) In the absence of applicable provisions in the Insurance Code,

the Civil Code;

(3) In the absence of applicable provisions in the Insurance Code

and Civil Code, the general principles on the subjects in the
United States.

6. What is the rule in insurance as to acceptance by cable?

The Insurance Code is silent as to acceptance by cable. However, Article

1319 Civil Code states that an acceptance made by letters shall not bind the
person making the offer except from the time it came to his knowledge. (Enriquez
vs. Sun Life Assurance of Canada, G.R. No. L-15895, November 29, 1920)

7. X an American corporation insured the life of Y. The first premium covered

the period up to September 26, 1942. After which no premium payments
were made. The insurer had closed its office because of Japanese
occupation until 1945. The insurer refused to pay due to non-payment of
the premium. Is the refusal of the insurer justified?

Yes, the insurers refusal is justified because the Insurance Code and the
Civil Code is silent as to the given situation. As held by New York Rule which
declares that the contract is not merely suspended, but instead is revoked by
reason of non-payment of the payment, since the payment of the same is
 peculiarly of the essence of the contract. (Constantino vs. Asia Life Insurance
Company, G.R. No. L-1669, August 31, 1950)

8. What are the nature and characteristics of a contract of Insurance?

9. Is a health care agreement considered an insurance contract?

10. What are the rules of construction ?