INSURANCE CODE (RA No.

10607 amending PD employed clear and unambiguous

no. 612) words

Contract of Insurance 3. Aleatory Contract

- An agreement whereby one undertakes
for a consideration to indemnify • The obligation of the insurer to pay the
another against loss, damage, or liability proceeds of the insurance arises only
arising from an unknown or contingent upon the happening of an event which
event is uncertain, or which is to occur at an
indeterminate time
Doing or transacting an insurance business
4. Contract of Indemnity
A person is doing or transacting an insurance
business if he performs any of the following: • means that the insured, who has
insurable interest over the property, is
a. Making or proposing to make as insurer only entitled to recover the amount of
any insurance contract; actual loss sustained and the burden is
b. Making or proposing to make as surety and upon him to establish the amount of
contract of suretyship as a vocation, not as such loss
mere incident to any other legitimate
business of a surety 5. Uberrimae Fidae Contracts
c. Doing any insurance business like
reinsurance and similar acts • contracts of utmost good faith. It
d. Doing or proposing to do any business requires the parties to the contract of
equivalent to the above insurance to disclose conditions
affecting the risk of which he is aware
CHARACTERISTICS OF INSURANCE or material fact, which the applicant
knows, and those, which he ought to
1. Risk-Distributing Device know
• serves to distribute the risk of economic
loss among as many as possible to those 6. Personal Contract
who are subject to the same kind of risk.
• The law presumes that the insurer
• By paying a predetermined amount into considered the personal qualifications
a general fund out of which payment will of the insured in approving the
be made for an economic loss of a application for insurance
defined type, each member contributes
to a small degree towards compensation ELEMENTS OF INSURANCE
for losses suffered by any member of the 1. Existence of an insurable interest
group 2. Risk of loss
3. Assumption of risk
2. Contract of Adhesion / Fine Print Rule 4. Scheme to distribute losses
5. Payment of Premiums
• considering that most of the terms of
the contract do not result from mutual PRINCIPAL OBJECT AND PURPOSE TEST
negotiations between the parties as ð The contract is insurance if the principal
they are prescribed by the insurer in object and purpose is the assumption of
printed form to which the insured may risk and indemnification of loss
“adhere” if he chooses but which he
cannot change. PERFECTION OF INSURANCE CONTACT

• In case of doubt, the contract shall be Insurance Contract

interpreted strictly against the insurer - Consensual contract and perfected the
and liberally in favor of the insured moment there is a meeting of minds
with respect to the object and the cause
• If the terms of the contract are clear, of consideration
there is no room for interpretation and
the courts are bound to adhere to the Insured – one making the offer by submitting an
insurance contract although the application to the insurer and the latter accepts
contract may be rather onerous. Courts the offer by approving the application
cannot make a new contract for the è mere submission of the application
parties where they themselves have without the corresponding approval of
 the policy does not result in the a. Life Insurance (Individual Life, Group
perfection of the contract of insurance Life, Industrial Life)
b. Non-Life Insurance (Marine, Fire
Delivery of Policy Casualty)
o Since the contract of insurance is c. Contract of Suretyship
consensual and not a formal or real d. Microinsurance
contract, delivery of the policy is not
necessary for its perfection. However, PARTIES TO INSURANCE CONTRACTS
the insured has the right to demand • Insurer
delivery of the policy • Insured
• Beneficiary
Delay in Approval of Policy
iNSURABLE INTEREST
Mere delay in acceptance
è Not result in a binding contract Life Insurance
è Courts cannot impose upon the parties - In general, the test is whether the
of a contract if they did not consent person is interested in the preservation
è Insurer may be liable for taxes of the insured life despite the insurance

COVER NOTE Property Insurance

o Persons who wish to be insured may get - In general, a person has insurable
protection before the perfection of the interest in the property, if he derives
insurance contract (after notice of pecuniary benefit or advantage from its
approval of the application) by securing preservation or would suffer pecuniary
a cover note. loss, damage or prejudice by its
destruction
ð Issued buy the insurer shall be deemed
an insurance contract as contemplated Insurable Interest in Property vs Insurable
under IC Interest in Life
ð Issued or renewed upon after the
approval of the Insurance Commission As to extent
è Insurable interest in life is unlimited
o shall be valid and binding not more than (except for life insurance effected by
60 days from the date of its issuance the creditor to the life of the debtor)

o No separate premium (separate from è Insurable interest in property is limited

the policy or main contract) is required to the actual value of the interest
for the cover note thereon

o May be cancelled by either party upon As to time when insurable interest must exist
prior notice to the other of at least è In life insurance, it is enough that
seven days insurable interest exists at the time the
policy takes effect and need not exist at
ð The policy should be issued within 60 the time of the loss
days after the issuance of the cover note
è In property insurance, it is necessary
ð The 60-day period may be extended that the insurable interest exists when
upon written approval of the Insurance the insurance takes effect and when the
Commission loss occurs, but need not exist in the
ð The written approval of the Insurance meantime
Commission is dispensed with upon the
certification of the president, vice VARIABLE CONTRACTS
president or general manager of the - Any policy or contract on either a group
insurer that the risk involved, the values or individual basis issued by an
of such risks and premium therefore, insurance company providing for
have not as yet been determined or benefits or other contractual payments
established and the extension or or values thereunder to vary so as to
renewal is not contrary to or is not for reflect investment results of any
the purpose of violating the Insurance segregated portfolio of investment
Code or any rule
Claims Settlement
TYPES OF INSURANCE CONTRACTS
Life Insurance
• The proceeds shall be paid immediately
upon the maturity of the policy if there is
such a maturity date.

• If the policy matures after the death of

the insured, within 60 days after
presentation of the claim and filing of the
proof of the death of the insured.

Property Insurance
• The proceeds shall be paid within 30 days
after proof of loss is received by the
insurer and ascertainment of the loss or
damage is made either by agreement or
by arbitration.

• If no ascertainment is made within 60

days after receipt of proof of loss, the loss
shall be paid within 90 days after such
receipt

PRESCRIPTION / WHEN TO FILE CLAIM

ð In the absence of an express stipulation
in the policy, it being based on a written
contract, the action prescribes in 10
years

RIGHT OF SUBROGRATION
• A normal incident of indemnity in
property insurance as a legal effect of
payment
• it inures to the insurer without any
formal assignment or any express
stipulation to that effect in the policy.
• Said right is not dependent upon nor
does it grow out of any privity of
contract. Payment to the insured makes
the insurer an assignee in equity

Cases when there is no right of subrogration:

è The insured by his own act releases the
wrongdoer / third person liable for the
loss
è Where the insurer pays the insured for a
loss or risk not covered by the policy
è In life insurance
è For recovery of loss in excess of insurance
coverage

When can the insurer rescind the insurance policy?

è Basis for the rescission
è Coupled with a check for the amount of
premiums paid
è Exercised within two years that the
insurance is in force during the lifetime of
the insured
SOCIAL SECURITY SYSTEM ACT (RA No. 11199)
• Any changes, adjustments,
DECLARATION OF POLICY modifications, eliminations or
- policy of the State to establish, develop, improvements in the benefits to be
promote and perfect a sound and viable available under the remaining private
tax-exempt social security system plan, which may be necessary to adopt
suitable to the needs of the people by reason of the reduced contributions
throughout the Philippines which shall thereto as a result of the integration,
promote social justice through savings, shall be subject to agreements between
and ensure meaningful social security the employers and employees
protection to members and their concerned.
beneficiaries against the hazards of • The private benefit plan which the
disability, sickness, maternity, old age, employer shall continue for his
death, and other contingencies employees shall remain under the
resulting in loss of income or financial employer‘s management and control
burden. unless there is an existing agreement to
the contrary
• The State shall endeavor to extend social • Nothing in this Act shall be construed as
security protection to Filipino workers, a limitation on the right of employers
local or overseas, and their beneficiaries. and employees to agree on and adopt
benefits which are over and above those
- In the pursuit of this policy, a social provided under this Act
security program shall be developed • Spouses who devote full time to
emphasizing the value of "work, save, managing the household and family
invest and prosper". The maximum affairs, unless they are also engaged in
profitability of investible funds and other vocation or employment which is
resources of the program shall be subject to mandatory coverage, may be
ensured through a culture of excellence covered by the SSS on a voluntary basis
in management grounded upon sound
and efficient policies employing COMPULSORY COVERAGE OF SELF-EMPLOYED
internationally recognized best
practices Including but not limited to:
è All-self employed professionals
Coverage: è Partners and single proprietors of
è Compulsory upon all employees businesses
including kasambahay or domestic è Actors and actresses, directors,
workers not over sixty years of age scriptwriters and news
and their employers correspondents who do not fall
within the definition of employee
• Any benefit already earned by the è Professional athlete, coaches,
employees under private benefit plans trainers, and jockeys
existing at the time of the approval of è Individual farmers and fishermen
this Act shall not be discontinued,
reduced or otherwise impaired. COMPULSORY COVERAGE OF OFW
o Upon all sea-based and land-based
Private plans OFWs as defined under Republic Act
- are existing and in force at the time of No. 8042, otherwise known as the
compulsory coverage shall be Migrant Workers and Overseas Filipinos
integrated with the plan of the SSS in Act of 1995. as amended by Republic
such a way where the employers Act No. 10022
contribution to his private plan is more o They are not over sixty (60) years of age
than that required of him in this Act
PENSION
• He shall pay to the SSS only the Monthly pension highest of the following:
contribution required of him and he shall ð Sum of P300 plus 20% of average
continue his contribution to such private monthly salary credit plus 2% of
plan less his contribution to the SSS so that average monthly salary credit for each
the employer’s total contribution to his credited year of service in excess of 10
benefit plan and to the SSS shall be the years
same as his contribution to his private ð 40% of average monthly salary credit
benefit plan before the compulsory ð P1,000
coverage
 • the minimum pension shall be One
thousand two hundred pesos (₱1,200.00) (2) has reached the age of sixty-five (65) years,
for members with at least ten (10) shall be entitled for as long as he lives to the
credited years of service monthly pension

• Two thousand four hundred pesos è He shall have the option to receive his
(₱2,400.00) for those with twenty (20) first eighteen (18) monthly pensions in
credited years of service lump sum discounted at a preferential
ð That the Commission, upon rate of interest to be determined by the
determination of actuarial SSS
soundness, may provide pension
increase than the amounts A covered member who is sixty (60) years old at
specified herein retirement and who does not qualify for
pension benefits under paragraph (a) above
Additional Benefit Allowance: è shall be entitled to a lump sum benefit
è amounting to One thousand pesos equal to the total contributions paid by
(₱1,000.00) shall be given to all him and on his behalf
retirement, death, and disability è He is separated from employment and
pensioners receiving monthly pensions in is not continuing payment of
or after January two thousand seventeen contributions to the SSS on his own.
(2017).
• The monthly pension shall be suspended
The Commission may determine the grant of upon the reemployment or resumption of
additional benefit allowance: self-employment of a retired member who
è the actuarial soundness of the reserve is less than sixty-five (65) years old. He shall
fund shall be guaranteed. again be subject to Section Eighteen and his
employer to Section Nineteen of this Act
All other additional allowances to monthly
pension subsequent to the Memorandum of the Upon the death of the retired member, his
Executive Secretary dated February 22, 2017 primary beneficiaries as of the date of his
shall be subject to the requirement of fund retirement shall be entitled to receive the
viability and sustainability as determined by the monthly pension:
Commission based on the recommendations of è That if he has no primary beneficiaries
the Office of the Chief Actuary guaranteeing the and he dies within sixty (60) months
actuarial soundness of the grant of such from the start of his monthly pension,
allowances his secondary beneficiaries shall be
entitled to a lump sum benefit
DEPENDENT’S PENSION equivalent to the total monthly pensions
corresponding to the balance of the five-
Where monthly pension is payable on account year guaranteed period, excluding the
of death, permanent total disability or dependents’ pension.
retirement, dependents’ pension equivalent to
ten percent (10%) of the monthly pension or The monthly pension of a member who retires
Two hundred fifty pesos (₱250.00), whichever is after reaching age sixty (60) shall be the higher
higher, shall also be paid for each dependent of either:
child conceived on or before the date of the
contingency but not exceeding five (5), (1) the monthly pension computed at the
beginning with the youngest and without earliest time he could; have retired had
substitution he been separated from employment or
ceased to be self-employed plus all
è That where there are legitimate and adjustments thereto
illegitimate children, the former shall be
preferred. (2) the monthly pension computed at the
time when he actually retires
RETIREMENT BENEFITS
A member who has paid at least one hundred DEATH BENEFITS
twenty (120) monthly contributions prior to the
semester of retirement and who: Upon the death of a member who has paid at
least thirty-six (36) monthly contributions prior
(1) has reached the age of sixty (60) years and is to the semester of death, his primary
already separated from employment or has beneficiaries shall be entitled to the monthly
ceased to be self-employed pension:
 Commission, subject to the provisions of
è That if he has no primary beneficiaries, Section 4(a)(9) of this Act.
his secondary beneficiaries shall be • The monthly salary credits, the schedule
entitled to a lump sum benefit and the rate of contributions shall also
equivalent to thirty-six (36) times the apply to self-employed, voluntary, and
monthly pension. other members.
è If he has not paid the required thirty-six
(36) monthly contributions, his primary EMPLOYER’S CONTRIBUTION
or secondary beneficiaries shall be • Beginning on the last day of the month
entitled to a lump sum benefit when an employee’s compulsory
equivalent to the monthly pension times coverage takes effect and every month
the number of monthly contributions thereafter during his employment, his
paid to the SSS or twelve (12) times the employer shall pay, with respect to such
monthly pension, whichever is higher. covered employee, the employer’s
contribution in accordance with the
OTHER BENEFITS schedule provided in this Act.
o Permanent disability benefits
o Funeral benefit (P12,000.00) • An employer shall not deduct, directly or
o Sickness benefit indirectly, from the compensation of his
o Maternity leave benefit employees covered by the SSS or
o Unemployment insurance or otherwise recover from them the
involuntary separation benefits employer’s contributions with respect to
such employees.
EXEMPTION FROM TAX, LEGAL PROCESS AND
LIEN • The remittance of such contributions by
the employer shall be supported by a
All laws to the contrary notwithstanding, the quarterly collection list to be submitted
SSS and all its assets and properties, all to the SSS at the end of each calendar
contributions collected and all accruals thereto quarter indicating the correct ID number
and income or investment earnings therefrom of the employer, the correct names and
as well as all supplies, equipment, papers or the SSS numbers of the employees and
documents shall be exempt from any tax, the total contributions paid for their
assessment, fee, charge, or customs or import account during the quarter.
duty; and all benefit payments made by the SSS
shall likewise be exempt from all kinds of taxes, REMITTANCE OF CONTRIBUTION
fees or charges, and shall not be liable to • Imposed in the preceding section shall be
attachments, garnishments, levy or seizure by remitted to the SSS within the first ten (10)
or under any legal or equitable process days of each calendar month following
whatsoever, either before or after receipt by the month for which they are applicable or
the person or persons entitled thereto, except within such time as the Commission may
to pay any debt of the member to the SSS. No prescribe.
tax measure of whatever nature enacted shall • Every employer required to deduct and to
apply to the SSS, unless it expressly revokes the remit such contributions shall be liable for
declared policy of the State in Section 2 hereof their payment and if any contribution is
granting tax-exemption to the SSS. Any tax not paid to the SSS
assessment imposed against the SSS shall be
null and void Delinquent employer shall pay besides the
contribution a penalty of two percent (2%)
EMPLOYEE’S CONTRIBUTIONS per month from the date the contribution
• Beginning on the last day of the calendar falls due until paid.
month when an employee’s compulsory
coverage takes effect and every month If deemed expedient and advisable by the
thereafter during his employment, the Commission, the collection and remittance of
employer shall deduct and withhold from contributions shall be made quarterly or semi-
such employee’s monthly salary, wage, annually in advance, the contributions payable
compensation or earnings, the employee’s by the employees to be advanced by their
contribution in an amount corresponding respective employers
to his salary, wage, compensation or è Upon separation of an employee, any
earnings during the month in accordance contribution so paid in advance but not
with the monthly salary credits, the due shall be credited or refunded to his
schedule and the rate of contributions as employer.
may be determined and fixed by the
REMITTANCE OF CONTRIBUTIONS OF SELF- PENAL CLAUSE
EMPLOYED MEMBERS
ð remit their monthly contributions o Where none is authorized to be paid,
quarterly on such dates and schedules as shall make or cause to be made false
the Commission may specify through statement or representation as to any
rules and regulations compensation paid or received or
ð no retroactive payment of contributions whoever makes or causes to be made
shall be allowed, except as provided in any false statement of a material fact in
this Section any claim for any benefit payable under
this Act, or application for loan with the
METHOD OF COLLECTION AND PAYMENT SSS. or whoever makes or causes to be
• The SSS shall require a complete and made any false statement,
proper collection and payment of representation, affidavit or document in
contributions and proper identification connection with such claim or loan,
of the employer and the employee. shall suffer the penalties provided for in
Payment may be made in cash, checks, Article One hundred seventy-two of the
stamps, coupons, tickets, or other Revised Penal Code
reasonable devices that the
Commission may adopt o Whoever shall obtain or receive any
money or check under this Act or any
EMPLOYMENT RECORDS AND REPORTS agreement thereunder, without being
entitled thereto with intent to defraud
Each employer shall immediately report to the any member, employer or the SSS
SSS the names, ages, civil status, occupations,
salaries and dependents of all his employees Fine: not less than Five thousand pesos
who are subject to compulsory coverage (₱5,000.00) nor more than Twenty thousand
pesos (₱20,000.00) and imprisoned for not less
è If an employee subject to compulsory than six (6) years and one (1) day nor more than
coverage should die or become sick or twelve (12) years
disabled or reach the age of sixty (60)
without the SSS having previously o Whoever buys, sells, offers for sale,
received any report or written uses, transfers or takes or gives in
communication about him from his exchange, or pledges or gives in pledge,
employer, the said employer shall pay except as authorized in this Act or in
to the SSS damages equivalent to the regulations made pursuant thereto, any
benefits to which said employee stamp, coupon, ticket, book or other
member would have been entitled had device, prescribed pursuant to Section
his name been reported on time by the Twenty-three hereof by the
employer to the SSS Commission for the collection or
payment of contributions required
Except that in case of pension benefits, the
employer shall be liable to pay the SSS damages Fine: Not less than Five thousand pesos
equivalent to the accumulated pension due as (₱5,000.00) nor more than Twenty thousand
of the date of settlement of the claim or to the pesos (₱20,000.00), or imprisoned for not less
five (5) years’ pension, whichever is higher, than six (6) years and one (1) day nor more than
including dependents’ pension twelve (12) years, or both, at the discretion of
the court
è If the contingency occurs within thirty
(30) days from the date of employment, o Whoever, with intent to defraud, alters,
the employer shall be relieved of his forges, makes or counterfeits any
liability for damages stamp, coupon, ticket, book or other
è Any person or entity engaging the device prescribed by the Commission
services of an independent contractor for the collection or payment of any
shall be subsidiarily liable with such contribution required herein, or uses,
contractor for any civil liability incurred sells, lends, or has in his possession any
by the latter under this Act such altered, forged or counterfeited
è The same person or entity engaging the materials, or makes, uses, sells or has in
services of an independent contractor his possession any such altered, forged,
shall require such contractor to post a material in imitation of the material
surety bond to guarantee the payment used in the manufacture of such stamp,
of the worker’s benefits coupon, ticket, book or other device,
Fine: Not less than Five thousand pesos Criminal action arising from a violation of the
(₱5,000.00) nor more than Twenty thousand provisions
pesos (₱20,000.00) or imprisoned for not less è may be commenced by the SSS or the
than six (6) years and one (1) day nor more than employee concerned either under this
twelve (12) years, or both, at the discretion of Act or in appropriate cases under the
the court Revised Penal Code
è Such criminal action may be filed by the
o Whoever fails or refuses to comply with SSS in the city or municipality where the
the provisions of this Act or with the SSS office is located, if the violation was
rules and regulations promulgated by committed within its territorial
the Commission jurisdiction or in Metro Manila, at the
option of the SSS.
Fine: Not less than Five thousand pesos
(₱5,000.00) nor more than Twenty thousand
pesos (₱20,000.00), or imprisonment for not
less than six (6) years and one (1) day nor more
than twelve (12) years, or both, at the
discretion of the court

o Where the violation consists in failure

or refusal to register employees or
himself, in case of the covered self-
employed or to deduct contributions
from the employees’ compensation and
remit the same to the SSS

Fine: Not less than Five thousand pesos

(₱5,000.00) nor more than Twenty thousand
pesos (₱20,000.00) and imprisonment for not
less than six (6) years and one (1) day nor more
than twelve (12) years

If the act or omission penalized by this Act be

committed by an association, partnership,
corporation or any other institution, its
managing head, directors or partners shall be
liable for the penalties

Employee of the SSS (penalized)

- who receives or keeps funds or
property belonging, payable or
deliverable to the SSS and who shall
appropriate the same
- shall take or misappropriate
- shall consent, or through abandonment
or negligence
- shall permit any other person to take
such property or funds, wholly or
partially
- shall otherwise be guilty of
misappropriation of such funds or
property

Employer (after deducting the monthly

contributions or loan amortizations from his
employee’s compensation)
- fails to remit the said deduction to the
SSS within thirty (30) days from the
date they became due
- be presumed to have misappropriated
such contributions or loan
amortizations