Article 42p. 42

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

SECTION 74. The violation of a material warranty, or

other material provision of a policy, on the part of either

party thereto, entitles the other to rescind.

SECTION 75. A policy may declare that a violation of

specified provisions thereof shall avoid it, otherwise the

breach of an immaterial provision does not avoid the

policy.

SECTION 76. A breach of warranty without fraud

merely exonerates an insurer from the time that it occurs,

or where it is broken in its inception, prevents the policy

from attaching to the risk.

TITLE 8 Premium

SECTION 77. An insurer is entitled to payment of the

premium as soon as the thing insured is exposed to the

peril insured against. Notwithstanding any agreement to

the contrary, no policy or contract of insurance issued by

an insurance company is valid and binding unless and

until the premium thereof has been paid, except in the

case of a life or an industrial life policy whenever the

grace period provision applies, or whenever under the

broker

and

agency

agreements

with

duly

licensed

intermediaries, a ninety (90)-day credit extension is given.

No credit extension to a duly licensed intermediary

should exceed ninety (90) days from date of issuance of

the policy.

SECTION

78.

Employees

of

the

Republic of the

Philippines,

including

its

political

subdivisions

and

instrumentalities, and government-owned or -controlled

corporations, may pay their insurance premiums and loan

obligations through salary deduction: Provided, That the

treasurer, cashier, paymaster or official of the entity

employing

the

government

employee

is

authorized,

notwithstanding the provisions of any existing law, rules

and regulations to the contrary, to make deductions from

the salary, wage or income of the latter pursuant to the

agreement between the insurer and the government

employee and to remit such deductions to the insurer

concerned,

and

collect

such

reasonable

fee

for

its

services.

SECTION 79. An acknowledgment in a policy or

contract

of insurance or the receipt of premium is

conclusive evidence of its payment, so far as to make the

policy binding, notwithstanding any stipulation therein

that it shall not be binding until the premium is actually

paid.

SECTION 80. A person insured is entitled to a return of

premium, as follows:

(a) To the whole premium if no part of his interest in

the thing insured be exposed to any of the perils insured

against;

(b) Where the insurance is made for a definite period

of time and the insured surrenders his policy, to such

portion

of

the

premium

as

corresponds

with

the

unexpired time, at a pro rata rate, unless a short period

rate has been agreed upon and appears on the face of

the policy, after deducting from the whole premium any

claim for loss or damage under the policy which has

previously accrued: Provided, That no holder of a life

insurance policy may avail himself of the privileges of this

paragraph without sufficient cause as otherwise provided

by law.

SECTION 81. If a peril insured against has existed, and

the insurer has been liable for any period, however short,

the insured is not entitled to return of premiums, so far as

that particular risk is concerned.

SECTION 82. A person insured is entitled to a return of

the

premium

when

the

contract

is

voidable,

and

subsequently annulled under the provisions of the Civil

Code; or on account of the fraud or misrepresentation of

the insurer, or of his agent, or on account of facts, or the

existence of which the insured was ignorant of without

his fault, or when by any default of the insured other than

actual fraud, the insurer never incurred any liability under

the policy.

A

person insured is not entitled to a return of

premium if the policy is annulled, rescinded or if a claim is

denied by reason of fraud.

SECTION 83. In case of an over insurance by several

insurers other than life, the insured is entitled to a ratable

return of the premium, proportioned to the amount by

which the aggregate sum insured in all the policies

exceeds the insurable value of the thing at risk.

SECTION 84. An insurer may contract and accept

payments,

in

addition

to

regular

premium,

for

the

purpose of paying future premiums on the policy or to

increase the benefits thereof.

TITLE 9 Loss

SECTION 85. An agreement not to transfer the claim

of the insured against the insurer after the loss has

happened, is void if made before the loss except as

otherwise provided in the case of life insurance.

SECTION 86. Unless otherwise provided by the policy,

an insurer is liable for a loss of which a peril insured

against was the proximate cause, although a peril not

contemplated by the contract may have been a remote

cause of the loss; but he is not liable for a loss of which

the peril insured against was only a remote cause.

SECTION 87. An insurer is liable where the thing

insured is rescued from a peril insured against that would

otherwise have caused a loss, if, in the course of such

rescue, the thing is exposed to a peril not insured against,

which permanently deprives the insured of its possession,

in whole or in part; or where a loss is caused by efforts to

rescue the thing insured from a peril insured against.

SECTION 88. Where a peril is especially excepted in a

contract of insurance, a loss, which would not have

occurred but for such peril, is thereby excepted although

the immediate cause of the loss was a peril which was not

excepted.

SECTION 89. An insurer is not liable for a loss caused

by the willful act or through the connivance of the

insured; but he is not exonerated by the negligence of the

insured, or of the insurance agents or others.

TITLE 10 Notice of Loss

SECTION 90. In case of loss upon an insurance against

fire, an insurer is exonerated, if written notice thereof be

not given to him by an insured, or some person entitled

to the benefit of the insurance, without unnecessary

delay. For other non-life insurance, the Commissioner

may specify the period for the submission of the notice of

loss.

SECTION 91. When a preliminary proof of loss is

required by a policy, the insured is not bound to give such

proof as would be necessary in a court of justice; but it is

sufficient for him to give the best evidence which he has

in his power at the time.

SECTION 92. All defects in a notice of loss, or in

preliminary

proof

thereof,

which

the

insured

might

remedy, and which the insurer omits to specify to him,

without unnecessary delay, as grounds of objection, are

waived.

SECTION 93. Delay in the presentation to an insurer of

notice or proof of loss is waived if caused by any act of

him, or if he omits to take objection promptly and

specifically upon that ground.

SECTION

94.

If

the

policy

requires,

by

way

of

preliminary proof of loss, the certificate or testimony of a

person other than the insured, it is sufficient for the

insured to use reasonable diligence to procure it, and in

case of the refusal of such person to give it, then to

furnish reasonable evidence to the insurer that such

© Compiled by RGL

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