II.

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insurance company also rescinded the policy and refunded the premiums paid.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%)

(93) In return for the 20 years of faithful service of X as a househelper to Y, the latter promised to pay
Php100,000.00 to Xs heirs if he (X) dies in an accident by fire. X agreed. Is this an insurance contract?
(A) Yes, since all the elements of an insurance contract are present.
(B) Yes, since X services may be regarded as the consideration.
(C) No, since Y actually made a conditional donation in Xs favor.
(D) No, since it is in fact an innominate contract between X and Y.
(97) Shipowner X, in applying for a marine insurance policy from ABC, Co., stated that his vessel
usually sails middle of August and with normally 100 tons of cargo. It turned out later that the vessel
departed on the first week of September and with only 10 tons of cargo. Will this avoid the policy that
was issued?
(A) Yes, because there was breach of implied warranty.
(B) No, because there was no intent to breach an implied warranty.
(C) Yes, because it relates to a material representation.
(D) No, because there was only representation of intention
IV
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%)
XIII

Ciriaco leased a commercial apartment from Supreme Building Corporation (SBC). One of the
provisions of the one-year lease contract states:
"18. x x x The LESSEE shall not insure against fire the chattels, merchandise, textiles, goods
and effects placed at any stall or store or space in the leased premises without first obtaining
the written consent of the LESSOR. If the LESSEE obtains fire insurance coverage without the
consent of the LESSOR, the insurance policy is deemed assigned and transferred to the
LESSOR for the latters benefit."
Notwithstanding the stipulation in the contract, without the consent of SBC, Ciriaco insured the
merchandise inside the leased premises against loss by fire in the amount of P500,000.00 with First
United Insurance Corporation (FUIC).
A day before the lease contract expired, fire broke out inside the leased premises, damaging Ciriacos
merchandise. Having learned of the insurance earlier procured by Ciriaco, SBC demanded from FUIC
that the proceeds of the insurance policy be paid directly to it, as provided in the lease contract.
Who is legally entitled to receive the insurance proceeds? Explain. (4%)

VII.
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%)
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.
I.
Carlo and Bianca met in the La Boracay festivities. Immediately, they fell in love with each other and
got married soon after. They have been cohabiting blissfully as husband and wife, but they did not have
any offspring. As the years passed by, Carlo decided to take out an insurance on Biancaslife
for P1,000,000.00 with him (Carlo) as sole beneficiary, given that he did not have a steady source of
income and he always depended on Bianca both emotionally and financially. During the term of the
insurance, Bianca died of what appeared to bea mysterious cause so that Carlo immediately requested
for an autopsy tobe conducted. It was established that Bianca died of a natural cause. More than that, it
was also established that Bianca was a transgender all along a fact unknown to Carlo. Can Carlo
claim the insurance benefit? (5%)

On May 26, 2014, Jess insured with Jack Insurance (Jack) his 2014 Toyota Corolla sedan under a
comprehensive motor vehicle insurance policy for one year. On July 1, 2014, Jess car was unlawfully
taken. Hence, he immediately reported the theft to the Traffic Management Command (TMC) of the
Philippine National Police (PNP), which made Jess accomplish a complaint sheet as part of its
procedure. In the complaint sheet, Jess alleged that a certain Ric Silat(Silat) took possession of the
subject vehicle to add accessories and improvements thereon. However, Silat failed to return the
subject vehicle within the agreed 3-day period. As a result, Jess notified Jack of his claim for
reimbursement of the value of the lost vehicle under the insurance policy. Jack refused to pay claiming
that there is no theft as Jess gave Silat lawful possession of the car. Is Jack correct? (4%)
VIII.
As a rule, an insurance contract is consensual and voluntary. The exception is in the case of: (1%)
(A) Inland Marine Insurance
(B) Industrial Life Insurance
(C) Motor Vehicle Liability Insurance
(D) Life Insurance
IX.
On February 21, 2013, Barrack entered into a contract of insurance with Matino Insurance Company
(Matino) involving a motor vehicle. The policy obligates Matino to pay Barrack the amount of Six
Hundred Thousand Pesos (P600,000.00) in case of loss or damage to said vehicle during the period
covered, which is from February 26, 2013 to February 26, 2014.
On April 16, 2013, at about 9:00 a.m., Barrack instructed his driver, JJ, to bring the motor vehicle to a
near by auto shop for tune-up. However, JJno longer returned and despite diligent efforts to locate the
said vehicle, the efforts proved futile. Resultantly, Barrack promptly notified Matino of the said loss
and demanded payment of the insurance proceeds of P600,000.00.

In a letter dated July 5, 2013. Matino denied the claim, reasoning as stated in the contract that "the
company shall not be liable for any malicious damage caused by the insured, any member of his family
or by a person in the insureds service. Is Matino correct in denying the claim? (4%)
XIV.
On September 25, 2013, Danny Marcial (Danny) procured an insurance on his life with a face value
ofP5,000,000.00 from RN Insurance Company (RN), with his wife Tina Marcial(Tina) as sole
beneficiary. On the same day, Danny issued an undated check to RN for the full amount of the
premium. On October 1, 2013, RN issued the policy covering Dannys life insurance. On October 5,
2013, Dannymet a tragic accident and died. Tina claimed the insurance benefit, but RN was quick to
deny the claim because at the time of Dannys death, the check was not yet encashed and therefore the
premium remained unpaid.
Is RN correct? Will your answer be the same if the check is dated October 15, 2013? (4%)
XVII.
On December 1, 2010, Kore A Corporationshipped from South Korea to LT Corporation in Manila
some 300,000 sheets of high-grade special steel. The shipment was insured against all risks by NA
Insurance(NA). The carrying vessel arrived at the Portof Manila on January 10, 2011. When the
shipment was discharged, it was noted that 25,000 sheets were damaged and in bad order. The entire
shipment was turned over to the custody of ATI, the arrastre operator, on January 21, 2011 for storage
and safekeeping, pending its withdrawal by the consignees authorized customs broker, RVM.
On January 26 and 29, 2011, the subject shipment was withdrawn by RVM from the custody of ATI.
On January 29, 2011, prior to the withdrawal of the last batch of the shipment, a joint inspection of the
cargo was conducted per the Request for Bad Order Survey (RBO) dated January 28, 2011. The
examination report showed that 30,000 sheets of steel were damaged and in bad order.
NA Insurance paid LT Corporationthe amount of P30,000,000.00 for the 30,000 sheets that were
damaged, as shown in the Subrogation Receipt dated January 13, 2013. Thereafter, NA Insurance
demanded reparation against ATI for the goods damaged in its custody, in the amount of P5,000,00.00.
ATI refused to pay claiming that the claim was already barred by the statute of limitations. ATI alleged
that the Carriage of Goods by Sea Act (COGSA) applies in this case since the goods were shipped from
a foreign port to the Philippines. NA Insurance claims that the COGSA does not apply, since ATIis not
a shipper or carrier. Who is correct? (5%)
XXI.
On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Ilocos Bankers Life
Insurance Corporation (Ilocos Life) designating Creencia Aban(Aban), her niece, as her beneficiary.
Ilocos Life issued Policy No. 747, with a face value of P100,000.00, in Soteros favor on August 30,
1993, after the requisite medical examination and payment of the premium.
On April 10, 1996, Sotero died. Aban filed a claim for the insurance proceeds on July 9, 1996. Ilocos
Life conducted an investigation into the claim and came out withthe following findings:
1. Soterodid not personally apply for insurance coverage, as she was illiterate.
2. Soterowas sickly since 1990.
3. Soterodid not have the financial capability to pay the premium on the policy.

4. Soterodid not sign the application for insurance.

5. Aban was the one who filed the insurance application and designated herself as the
beneficiary.
For the above reasons and claiming fraud, Ilocos Life denied Abans claim on April 16, 1997, but
refunded the premium paid on the policy. (6%)
(A) May Sotero validly designate her niece as beneficiary?
(B) May the incontestability period set in even in cases of fraud as alleged in this case?
(C) Is Aban entitled to claim the proceeds under the policy?
1.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.
2.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.
3.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.
4.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.
5.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.
6.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.
d.that the insured can only claim proceeds in a life insurance policy two (2) years after
death.
7.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.
8.A house and lot is covered by a real estate mortgage (REM) in favor of ZZZ Bank. The bank
required that the house be insured. The owner of the policy failed to endorse nor assign the
policy to the bank. However, the Deed of Real Estate Mortgage has an express provision which
says that the insurance policy is also endorsed with the signing of the REM. Will this be
sufficient?
a.. No, insurance policy must be expressly endorsed to the bank so that the bank will
have a right in the proceeds of such insurance in the event of loss.
b.The express provision contained in the Deed of Real Estate Mortgage to the effect that
the policy is also endorsed is sufficient.
c.Endorsement of Insurance Policy in any form is not legally allowed.
d.Endorsement of the Insurance Policy must be in a formal document to be valid.
9.X is a passenger of a jeepney for hire being driven by Y. The jeepney collided with another
passenger jeepney being driven by Z who was driving recklessly. As a result of the collision, X
suffered injuries. Both passenger jeepneys are covered by Comprehensive Motor Vehicular
Insurance Coverage. If X wants to claim under the "no fault indemnity clause", his claim will lie
a.against the insurer of the jeepney being driven by Z who was the one at fault.
b.the claim shall lie against the insurer of the passenger jeepney driven by Y because X
was his passenger.
c.X has a choice against whom he wants to make his claim.
d.None of the above.
10.X insured the building she owns with two (2) insurance companies for the same amount. In
case of damage, a.X can not claim from any of the two (2) insurers because with the double insurance,
the insurance coverage becomes automatically void.
b.the two (2) insurers will be solidarily liable to the extent of the loss.

c.the two (2) insurers will be proportionately liable.

d.X can choose who he wants to claim against.
11.When X insured his building, X indicated in the application that it is a residential building,
but actually the building was being used as a warehouse for some hazardous materials. What is
the effect on the insurance policy, i f any?
a.The insurance policy can be cancelled because of the change in the use.
b.The insurance policy will automatically be changed.
c.The insurance policy need not be changed.
d.The insurance policy is fixed regardless of the change in the use.
12.X owned a house and lot. X insured the house. The house got burned. Then he sold the
partially burnt house and the lot to Y. Which statement is most accurate?
a.X is not anymore entitled to the proceeds of the insurance policy because he already
sold the partially burnt house and lot.
b.X is still entitled to the proceeds of the insurance policy because what is material is
that at the time of the loss, X is the owner of the house and lot.
c.No one is entitled to the proceeds because ownership over the house and lot was
already transferred.
d.Y will be the one entitled to the proceeds because he now owns the partially burnt
house and lot.
V
X borrowed from CCC Bank. She mortgaged her house and lot in favor of the bank. X insured her
house. Tt1e bank also got the house insured.
a.Is this double insurance? Explain your answer. (3%)
b.Is this legally valid? Explain your answer. (3%)
c.In case of damage, can X and CCC Bank separately claim for the insurance proceeds? (4%)

(21) T Shipping, Co. insured all of its vessels with R Insurance, Co. The insurance policies stated that
the insurer shall answer for all damages due to perils of the sea. One of the insured's ship, the MV Dona
Priscilla, ran aground in the Panama Canal when its engine pipes leaked and the oil seeped into the
cargo compartment. The leakage was caused by the extensive mileage that the ship had accumulated.
May the insurer be made to answer for the damage to the cargo and the ship?
(A) Yes, because the insurance policy covered any or all damage arising from perils of the sea.
(B) Yes, since there appears to have been no fault on the part of the shipowner and shipcaptain.
(C) No, since the proximate cause of the damage was the breach of warranty of seaworthiness
of the ship.
(D) No, since the proximate cause of the damage was due to ordinary usage of the ship, and thus
not due to a peril of the sea.
(26) An insured, who gains knowledge of a material fact already after the effectivity of the insurance
policy, is not obliged to divulge it. The reason for this is that the test of concealment of material fact is
determined

(A) at the time of the issuance of the policy.

(B) at any time before the payment of premium.
(C) at the time of the payment of the premium.
(D) at any time before the policy becomes effective.

(44) On June 1, 2011, X mailed to Y Insurance, Co. his application for life insurance, with payment for
5 years of premium enclosed in it. On July 21, 2011, the insurance company accepted the application
and mailed, on the same day, its acceptance plus the cover note. It reached X's residence on August 11,
2011. But, as it happened, on August 4, 2011, X figured in a car accident. He died a day later. May X's
heirs recover on the insurance policy?
(A) Yes, since under the Cognition Theory, the insurance contract was perfected upon
acceptance by the insurer of X's application.
(B) No, since there is no privity of contract between the insurer and Xs heirs.
(C) No, since X had no knowledge of the insurer's acceptance of his application before he died.
(D) Yes, since under the Manifestation Theory, the insurance contract was perfected upon
acceptance of the insurer of X's application.

(60) Where the insurer was made to pay the insured for a loss covered by the insurance contract, such
insurer can run after the third person who caused the loss through subrogation. What is the basis for
conferring the right of subrogation to the insurer?
(A) Their express stipulation in the contract of insurance.
(B) The equitable assignment that results from the insurers payment of the insured.
(C) The insureds formal assignment of his right to indemnification to the insurer.
(D) The insureds endorsement of its claim to the insurer.
(64) If an insurance policy prohibits additional insurance on the property insured without the insurer's
consent, such provision being valid and reasonable, a violation by the insured
(A) reduces the value of the policy.
(B) avoids the policy.
(C) offsets the value of the policy with the additional insurancess value.
(D) forfeits premiums already paid.
(73) X, in the hospital for kidney dysfunction, was about to be discharged when he met his friend Y. X
told Y the reason for his hospitalization. A month later, X applied for an insurance covering serious
illnesses from ABC Insurance, Co., where Y was working as Corporate Secretary. Since X had already
told Y about his hospitalization, he no longer answered a question regarding it in the application form.

Would this constitute concealment?

(A) Yes, since the previous hospitalization would influence the insurer in deciding whether to
grant X's application.
(B) No, since Y may be regarded as ABCs agent and he already knew of Xs previous
hospitalization.
(C) Yes, it would constitute concealment that amounts to misrepresentation on X's part.
(D) No, since the previous illness is not a material fact to the insurance coverage.
-VThe Peninsula Insurance Company offered to insure Francis' brand new car against all risks in the sum
of P1 Million for 1 year. The policy was issued with the premium fixed at P60,000.00 payable in 6
months. Francis only paid the first two months installments. Despite demands, he failed to pay the
subsequent installments. Five months after the issuance of the policy, the vehicle was carnapped.
Francis filed with the insurance company a claim for its value. However, the company denied his claim
on the ground that he failed to pay the premium resulting in the cancellation of the policy.
Can Francis recover from the Peninsula Insurance Company? 5%
- VII 1.What is a mutual insurance company or association? 2.5%
2.Distinguish between the role of a conservator and that of a receiver of a bank. 2.5%

VI
On January 1, 2000, Antonio Rivera secured a life insurance from SOS Insurance Corp. for P1 Million
with Gemma Rivera, his adopted daughter, as the beneficiary. Antonio Rivera died on March 4, 2005
and in the police investigation, it was ascertained that Gemma Rivera participated as an accessory in
the killing of Antonio Rivera. Can SOS Insurance Corp. avoid liability by setting up as a defense the
participation of Gemma Rivera in the killing of Antonio Rivera? Discuss with reasons. (4%)
VII
Terrazas de Patio Verde, a condominium building, has a value of P50 Million. The owner insured the
building against fire with three (3) insurance companies for the following amounts:
Northern Insurance
Corp.

- P20
Million

Southern Insurance
Corp.

- P30
Million

Eastern Insurance
- P50
Corp.
Million
a.Is the owner's taking of insurance for the building with three (3) insurers valid? Discuss. (3%)

b.The building was totally razed by fire. If the owner decides to claim from Eastern Insurance
Corp. only P50 Million, will the claim prosper? Explain. (2%)

IV.
(10%)
Alfredo took out a policy to insure his commercial building against fire. The broker for the insurance
company agreed to give a 15-day credit within which to pay the insurance premium. Upon delivery of
the policy on May 15, 2006, Alfredo issued a postdated check payable on May 30, 2006. On May 28,
2006, a fire broke out and destroyed the building owned by Alfredo.
a.May Alfredo recover on the insurance policy?
b.Would your answer in (a) be the same if it was found that the proximate cause of the fire was
an explosion and that fire was but the immediate cause of loss and there is no excepted peril
under the policy?
c.If the fire was found to have been caused by Alfredo's own negligence, can he still recover on
the policy?
Reason briefly in (a), (b) and (c).

VII.
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%)

XX.
On May 13, 1996, PAM, Inc. obtained a P15,000,000.00 fire insurance policy from Ilocano Insurance
covering its machineries and equipment effective for one (1) yearor until May 14, 1997. The policy
expressly stated that the insured properties were located at "Sanyo Precision Phils. Building, Phase III,

Lots 4 and 6, Block 15, PEZA, Rosario, Cavite." Before its expiration, the policy was renewed on "as
is" basis for another year or until May 13, 1998. The subject properties were later transferred to Pace
Factory also in PEZA. On October 12, 1997, during the effectivity of the renewed policy, a fire broke
out at the Pace Factory which totally burned the insured properties.
The policy forbade the removal of the insured properties unless sanctioned by Ilocano. Condition 9(c)
of the policy provides that "the insurance ceases to attach as regards the property affected unless the
insured, before the occurrence of any loss or damage, obtains the sanction of the company signified by
endorsement upon the policy x x x (c) if the property insured is removed to any building or place other
than in that which is herein stated to be insured." PAM claims that it has substantially complied with
notifying Ilocano through its sister company, the RBC, which, in fact, referred PAM to Ilocano for the
insurance coverage. Is Ilocano liable under the policy? (4%)
XVII.
ELP Insurance, Inc. issued Marine Policy No. 888 in favor of FCL Corp. to insure the shipment of 132
bundles of electric copper cathodes against all risks. Subsequently, the cargoes were shipped on board
the vessel "M/V Menchu" from Leyte to Pier 10, North Harbor, Manila.
Upon arrival, FCL Corp. engaged the services of CGM, Inc. for the release and withdrawal of the
cargoes from the pier and the subsequent delivery to its warehouses/plants in Valenzuela City. The
goods were loaded on board twelve (12) trucks owned by CGM, Inc., driven by its employed drivers
and accompanied by its employed truck helpers. Of the twelve (12) trucks en routeto Valenzuela City,
only eleven (11) reached the destination. One (1) truck, loaded with eleven (11) bundles of copper
cathodes, failed to deliver its cargo.
Because of this incident, FCL Corp. filed with ELP Insurance, Inc. a claim for insurance indemnity in
the amount ofP1,500,000.00. After the requisite investigation and adjustment, ELP Insurance, Inc. paid
FCL Corp. the amount ofP1,350,000.00 as insurance indemnity.
ELP Insurance, Inc., thereafter, filed a complaint for damages against CGM, Inc. before the Regional
Trial Court (RTC), seeking reimbursement of the amount it had paid to FCL Corp. for the loss of the
subject cargo. CGM, Inc. denied the claim on the basis that it is not privy to the contract entered into by
and between FCL Corp. and ELP Insurance, Inc., and hence, it is not liable therefor. If you are the
judge, how will you decide the case? (4%)
(54) For a constructive total loss to exist in marine insurance, it is required that the person insured
relinquish his interest in the thing insured. This relinquishment must be
(A) actual.
(B) constructive first and if it fails, then actual.
(C) either actual or constructive.
(D) constructive.
(69) Perils of the ship, under marine insurance law, refer to loss which in the ordinary course of events
results from
(A) natural and inevitable actions of the sea.
(B) natural and ordinary actions of the sea.
(C) unnatural and inevitable actions of the sea.

(D) unnatural and ordinary actions of the sea.

(89) X Shipping, Co., insured its vessel MV Don Teodoro for Php100 Million with ABC Insurance, Co.
through T, an agent of X Shipping. During a voyage, the vessel accidentally caught fire and suffered
damages estimated at Php80 Million. T personally informed ABC Insurance that X Shipping was
abandoning the ship. Later, ABC insurance denied X Shippings claim for loss on the ground that a
notice of abandonment through its agent was improper. Is ABC Insurance right?
(A) Yes, since X Shipping should have ratified its agents action.
(B) No, since T, as agent of X Shipping who procured the insurance, can also give notice of
abandonment for his principal.
(C) Yes, since only the agent of X Shipping relayed the fact of abandonment.
(D) No, since in the first place, the damage was more than of the ship's value.