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Lecture Outline
Judge Nelita Jesusa A. Bacaling
College of Law
University of San Agustin
Iloilo City
2. Insurance Contract-
2.1 The definition provided by law has been subject to criticism since it seems
to exclude life Insurance which is not a contract of indemnity since the
loss of life can never be indemnified.
3. This concept is based on equity so that the person suffering loss will not carry the
burden all on his own. At one point or another, the risks that are insured against
such as loss, damage, injury or liability will also be experienced by everyone
hence, everyone should also participate in minimizing the effects of the
happening of such risks to the persons experiencing the same at the moment. This
distribution in practical terms is done by contributing monetarily to a common
fund, so that the happening of these risks that results to loss damage or injury to a
certain portion of the participating public will give rise to a claim against that fund,
thereby minimizing the effects of such loss, damage or injury, instead of having no
fund from where to source any help or aid, and carrying the burden all by oneself.
4. As a contract, insurance takes on characteristics that are not the same as those
of ordinary contracts contemplated under the Civil Code of the Philippines. The
interpretation is different, the effects are different, and in some cases, the rights of
the parties or the consequence of their actions produce different effects from that
or ordinary contracts. One distinct difference is that insurance contracts could
give rise to subrogation, which is an exception to the rule on privity of contracts.
But in many respects, the Civil Code applies suppletorily.
Case: American Home Assurance Corp. versus Tantuco 366 SCRA 740 (2001)
Case: Philippine Health Care Provider, Inc. vs. Comm. of Internal Revenue, 600
SCRA 413 (2009)