Case Digest Insurance (GEAGONIA & PALILEO CASES ARE FOR SECTION 8)

1. Geagonia v CA G.R. No. 114427 February 6, 1995

Facts:
Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1 year policy and covered
thestock trading of dry goods. The policy noted the requirement that "3. The insured shall give notice to the Company of
any insurance or insurances already effected, or which may subsequently be effected, covering any of the property or properties
consisting of stocks in trade, goods in process and/or inventories only hereby insured, and unless notice be given and the particulars
of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on
behalf of the Company before the occurrence of any loss or damage, all benefits under this policy shall be deemed forfeited, provided
however, that this condition shall not apply when the total insurance orinsurances in force at the time of the loss or damage is not
more than P200,000.00."
The petitioners stocks were destroyed by fire. He then filed a claim which was subsequently denied because the petitioners stocks
were covered by two other fire insurance policies for Php 200,000 issued by PFIC. The basis of the private respondent's denial was
the petitioner's alleged violation of Condition 3 of the policy.
Geagonia then filed a complaint against the private respondent in the Insurance Commission for the recovery of P100,000.00
under fire insurance policy and damages. He claimed that he knew the existence of the other two policies. But, he said that he had
no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies and this requirement
was not mentioned to him by the private respondent's agent.
The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the
two fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o informing him
or securing his consent; and that Cebu Tesing Textile, as his creditor, had insurable interest on the stocks.
The Insurance Commission then ordered the respondent company to pay complainant the sum of P100,000.00 with interest and
attorneys fees.
CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the existence of the two other
policies issued by the PFIC.
Issues:
1. WON the petitioner had not disclosed the two insurance policies when he obtained the fire insurance and thereby violated
Condition 3 of the policy.
2. WON he is prohibited from recovering
Held: Yes. No. Petition Granted
Ratio:
1. The court agreed with the CA that the petitioner knew of the prior policies issued by the PFIC. His letter of 18 January 1991 to the
private respondent conclusively proves this knowledge. His testimony to the contrary before the Insurance Commissioner and which
the latter relied upon cannot prevail over a written admission made ante litem motam. It was, indeed, incredible that he did not
know about the prior policies since these policies were not new or original.
2. Stated differently, provisions, conditions or exceptions in policies which tend to work a forfeiture of insurance policies should be
construed most strictly against those for whose benefits they are inserted, and most favorably toward those against whom they are
intended to operate.
With these principles in mind, Condition 3 of the subject policy is not totally free from ambiguity and must be meticulously analyzed.
Such analysis leads us to conclude that (a) the prohibition applies only to double insurance, and (b) the nullity of the policy shall only
be to the extent exceeding P200,000.00 of the total policies obtained.
Furthermore, by stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss
does not exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding
P200,000.00. What it had in mind was to discourage over-insurance. Indeed, the rationale behind the incorporation of "other
insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property owner
obtains insurance policies from two or more insurers in a total amount that exceeds the property's value, the insured may have an
inducement to destroy the property for the purpose of collecting the insurance. The public as well as the insurer is interested in
preventing a situation in which a fire would be profitable to the insured.

2.

Palileo v. Cosio

G.R. No. L-7667, November 28, 1955

FACTS: Plaintiff obtained from defendant a loan in the sum of P12,000. To secure the payment of the aforesaid loan, defendant
required plaintiff to sign a document known as Conditional Sale of Residential Building, purporting to convey to defendant, with
right to repurchase, a two-story building of strong materials belonging to plaintiff. This document did not express the true intention
of the parties which was merely to place said property as security for the payment of the loan.

After the execution of the aforesaid document, defendant insured the building against fire for the sum of P15,000, the insurance
policy having been issued in the name of defendant. The building was partly destroyed by fire and, after proper demand, defendant
collected from the insurance company an indemnity of P13,107.00. Plaintiff demanded from defendant that she be credited with the
necessary amount to pay her obligation out of the insurance proceeds but defendant refused to do so.
ISSUE: WON a mortgagor is entitled to the insurance proceeds of the mortgaged property independently insured by the mortgagee?
What is the effect of the insurance?

HELD: NO. The rule is that where a mortgagee, independently of the mortgagor, insures the mortgaged property in his own name
and for his own interest, he is entitled to the insurance proceeds in case of loss, but in such case, he is not allowed to retain his claim
against the mortgagor, but is passed by subrogation to the insurer to the extent of the money paid. (Vance on Insurance, 2d ed., p.
654) Or, stated in another way, the mortgagee may insure his interest in the property independently of the mortgagor. In that
event, upon the destruction of the property the insurance money paid to the mortgagee will not inure to the benefit of the
mortgagor, and the amount due under the mortgage debt remains unchanged. The mortgagee, however, is not allowed to retain his
claim against the mortgagor, but it passes by subrogation to the insurer, to the extent of the insurance money paid.

-------------------------START OF INSURABLE INTEREST CASES------------------------------3.

INSULAR LIFE VS. EBRADO

80 SCRA 181

Facts:
> Buenaventura Ebrado was issued al life plan by Insular Company. He designated Capriona as his beneficiary, referring to her as
his wife.
> The insured then died and Carponia tried to claim the proceeds of the said plan.
> She admitted to being only the common law wife of the insured.
> Pascuala, the legal wife, also filed a claim asserting her right as the legal wife. The company then filed an action for interpleader.

Issue:
Whether or not the common law wife named as beneficiary can collect the proceeds.

Held:
NO.
The civil code prohibitions on donations made between persons guilty of adulterous concubinage applies to insurance contracts. On
matters not specifically provided for by the Insurance Law, the general rules on Civil law shall apply. A life insurance policy is no
different from a civil donation as far as the beneficiary is concerned, since both are founded on liberality.

WHY WAS THE COMMON LAW WIFE NOT ED TO COLLECT THE PROCEEDS DESPITE THE FACT THAT SHE WAS THE BENEFICIARY?
ISNT THIS AGAINST SEC. 53?
It is true that SC went against Sec. 53. However, Sec. 53 is NOT the only provision that the SC had to consider. Art. 739 and 2012
of CC prohibit persons who are guilty of adultery or concubinage from being beneficiaries of the life insurance policies of the persons
with whom they committed adultery or concubinage. If the SC used only Sec. 53, it would have gone against Art. 739 and 2012.

4.

Southern Luzon Employees' Ass. V. Golpeo, Et Al. (1954)

FACTS:
Southern Luzon Employees' Association (SLEA) is composed of laborers and
employees of Tayabas Bus. Company and Batangas transportation Company
-Purpose: mutual aid of its members and their dependents in case of death.
1949: SLEA adopted a resolution allowing a member to name as his beneficiaries
his common law wife and/or children with her.
Roman Concepcion was a member of SLEA. He listed as his beneficiaries:
-AQUILINA MALOLES (common law wife)
-ROMAN, JR., ESTELA, ROLANDO, ROBIN (children with Aquilina)
1950 Roman died.
SLEA collected contributions from its members amounting to P2,505 for its
member, Roman.
-those who presented to claim
1.) Juanita Golpeo (legal wife)and children;
2.) Aquilina (common law wife) and children ( listed beneficiaries);
3.) Elsie Hicban (another common law wife) and child
an action for interpleading was instituted by SLEA against the claimants.
the court rendered the decision declaring Aquilina and her children the sole
beneficiaries of the sum P2,505.
only GOLPEO and CHILDREN appealed claiming that:
a.) insurance law is not applicable since SLEA is a mutual benefit association
under Revised Administrative Code and not an insurance company.
b.) even if the agreement is a contract of insurance, the stipulation b/w SLEA and
the deceased is void for being contrary to law, moral, or public policy because
according to Art. 739 of NCC, a donation is void when made b/w persons who are
guilty of adultery or concubinage at the time of donation, considering that
AQUILINA is not the legal wife.
ISSUE: W/N the agreement is a contract of insurance
: W/N Aquilina and her children can be validly made as Roman's
beneficiaries.

HELD: The appealed decision was affirmed.

1.) SLEA IS NOT A REGULAR INSURANCE COMPANY BUT THE DEATH BENEFIT IS
ANALOGOUS TO AN INSURANCE. Revised Administrative Code sec 1628 defines a
mutual benefit association as "an association providing for any method of accident
or LIFE INSURANCE among its members out of dues or assessments collected from

the membership", thus, the lower court correctly held that the agreement b/w SLEA
and Roman partook of the nature of a contract of insurance.
2.) Yes. The lower court invoked the pronouncements in the case of del val vs. del
val that, the agreement being analogous to a contract of insurance, then the
amount in question belonged exclusively to AQUILINA and her children and not to
the estate of Roman Concepcion, and that such proceeds are the separate and
individual property of the beneficiary, and not of the heirs of the person insured
(Roman in this case). This doctrine is supported by sec 428 of the Code of
Commerce which reads:
"The amounts which the underwriter must deliver to the person insured, in fulfillment of the contract, shall be
the property of the latter, even against the claims of the legitimate heirs or creditors of any kind whatsoever
of the person who effected the insurance in favor of the former."

And even granting that the claim of the counsel for Golpeo that the provision of the
New Civil Code should be applied, their argument with regard to Aquilinas status
shall still not affect the rights of Aquilinas children who are also named
beneficiaries of Roman, because even the New Civil Code recognizes the
successional rights of illegitimate children.
Separate Opinions:
REYES, J.B.L., J., concurring

I concur in the result for the reason that the contract here involved was perfected before the new Civil Code took
effect, and hence its provisions cannot be made to apply retroactively

5.

Gercio V. Sun Life Assurance Co. Of Canada (1925)

G.R. No. 23703

September 28, 1925

Lessons Applicable:

Blood relationship (Insurance)

Revocable Designation (Insurance)

FACTS:

January 29, 1910: Sun Life Assurance Co. of Canada issued a 20-year endowment insurance policy onthe life of Hilario
Gercio
insurance company agreed to insure the life of Gercio for the sum of P2,000, to be paid him on February 1, 1930,
or if the insured should die before said date, then to his wife, Mrs. Andrea Zialcita, should she survive him; otherwise to the
executors, administrators, or assigns of the insured
policy did not include any provision reserving to the insured the right to change the beneficiary

End of 1919: she was convicted of the crime of adultery

September 4, 1920: a decree of divorce was issued

March 4, 1922: Gercio formally notified the Sun Life that he had revoked his donation in favor of Andrea Zialcita, and that
he had designated in her stead his present wife, Adela Garcia de Gercio, as the beneficiary of the policy
Sun Life refused
Gercio filed a petition for mandamus to compel Sun Life

Trial Court: favored Gercio

ISSUE: W/N Gercio has the right to change the beneficiary of the policy
HELD: NO. Dismissed.

The wife has an insurable interest in the life of her husband.

The beneficiary has an absolute vested interest in the policy from the date of its issuance and delivery. So when a policy of
life insurance is taken out by the husband in which the wife is named as beneficiary, she has a subsisting interest in the policy
applies to a policy to which there are attached the incidents of a loan value, cash surrender value, an automatic
extension by premiums paid, and to an endowment policy, as well as to an ordinary lifeinsurance policy.
If the husband wishes to retain to himself the control and ownership of the policy he may so provide in the policy.
But if the policy contains no provision authorizing a change of beneficiary without the beneficiary's consent, the
insured cannot make such change.
Accordingly, it is held that a life insurance policy of a husband made payable to the wife as beneficiary, is the separate
property of the beneficiary and beyond the control of the husband.
effect produced by the divorce, the Philippine Divorce Law, Act No. 2710, merely provides in section 9 that the decree of
divorce shall dissolve the community property as soon as such decree becomes final
absence of a statute to the contrary, that if a policy is taken out upon a husband's life the wife is named as
beneficiary therein, a subsequent divorce does not destroy her rights under the policy
Neither the husband, nor the wife, nor both together had power to destroy the vested interest of the children in the policy.

VDA. DE CONSUEGRA V. GSIS - RETIREMENT INSURANCE BENEFITS

Facts:
> Jose Consuegra was employed as a shop foreman of the Office of the District Engineer in Surigao Del Norte.
> When he was still alive, he contracted two marriages:
o

First Rosario Diaz; 2 children = Jose Consuegra Jr. and Pedro but both predeceased him

2nd Basilia Berdin; 7 children. (this was contracted in GF while the first marriage subsisted)

> Being a GSIS member when he died, the proceeds of his life insurance were paid by the GSIS to Berdin and her children who
were the beneficiaries named in the policy.
> Since he was in the govt service for 22.5028 years, he was entitled to retirement insurance benefits, for which no beneficiary was
designated.
> Both families filed their claims with the GSIS, which ruled that the legal heirs were Diaz who is entitled to one-half or 8/16 of the
retirement benefits and Berdin and her children were entitled to the remaining half, each to receive an equal share of 1/16.
> Berdin went to CFI on appeal. CFI affirmed GSIS decision.

Issue:
To whom should the retirement insurance benefits be paid?

Held:
Both families are entitled to half of the retirement benefits.
The beneficiary named in the life insurance does NOT automatically become the beneficiary in the retirement insurance. When
Consuegra, during the early part of 1943, or before 1943, designated his beneficiaries in his life insurance, he could NOT have
intended those beneficiaries of his life insurance as also the beneficiaries of his retirement insurance because the provisions on
retirement insurance under the GSIS came about only when CA 186 was amended by RA 660 on June 18, 1951.

Sec. 11(b) clearly indicates that there is need for the employee to file an application for retirement insurance benefits when he
becomes a GSIS member and to state his beneficiary. The life insurance and the retirement insurance are two separate and distinct
systems of benefits paid out from 2 separate and distinct funds.

In case of failure to name a beneficiary in an insurance policy, the proceeds will accrue to the estate of the insured. And when there
exists two marriages, each family will be entitled to one-half of the estate.

NARIO V. PHILAMLIFE INSURANCE COMPANY - LOAN APPLICATION AND SURRENDER OF POLICY

Facts:
> Mrs. Nario applied for and was issued a life Insurance policy (no. 503617) by PHILAMLIFE under a 20-yr endowment plant, with a
face value of 5T. Her husband Delfin and their unemancipated son Ernesto were her revocable beneficiaries.
> Mrs. Nario then applied for a loan on the above policy with PHILAMLIFE w/c she is entitled to as policy holder, after the policy has
been in force for 3 years. The purpose of such loan was for the school expenses of Ernesto.
> The application bore the written signature and consent of Delfin in 2 capacities
o

As one of the irrevocable beneficiaries of the policy

As father-guardian of Ernesto and also the legal administrator of the minors properties pursuant to Art. 320 of the CC.

> PHILAMLIFE denied the loan application contending that written consent of the minor son must not only be given by his father as
legal guardian but it must also be authorized by the court in a competent guardianship proceeding.
> Mrs. Nario then signified her decision to surrender her policy and demand its cash value which then amounted to P 520.
> PHILAMLIFE also denied the surrender of the policy on the same ground as that given in disapproving the loan application.
> Mrs. Nario sued PHILAMLIFE praying that the latter grant their loan application and/or accept the surrender of said policy in
exchange for its cash value.
> PHILAMLIFE contends that the loan application and the surrender of the policy involved acts of disposition and alienation of the
property rights of the minor, said acts are not within the power of administrator granted under Art. 320 in relation to art. 326 CC,
hence court authority is required.

Issue:
Whether or not PHILAMLIFE was justified in refusing to grant the loan application and the surrender of the policy.
Held: YES.
SC agreed with the trial court that the vested interest or right of the beneficiaries in the policy should be measured on its full face
value and not on its cash surrender value, for in case of death of the insured, said beneficiaries are paid on the basis of its face value
and in case the insured should discontinue paying premiums, the beneficiaries may continue paying it and are entitled to automatic
extended term or paid-up insurance options and that said vested right under the policy cannot be divisible at any given time.

SC also agreed with TC that the said acts (loan app and surrender) constitute acts of disposition or alienation of property rights and
not merely management or administration because they involve the incurring or termination of contractual obligations.

Under the laws (CC and rules of Court) The father is constituted as the minors legal administrator of the propty, and when the
propty of the child is worth more than P2T (as in the case at bar, the minors propty was worth 2,500 his share as beneficiary), the
father a must file a petition for guardianship and post a guardianship bond. In the case at bar, the father did not file any petition for
guardianship nor post a guardianship bond, and as such cannot possibly exercise the powers vested on him as legal administrator of
the minors property. The consent given for and in behalf of the son without prior court authorization to the loan application and the
surrender was insufficient and ineffective and PHILAMLIFE was justified in disapproving the said applications.

Assuming that the propty of the ward was less than 2T, the effect would be the same, since the parents would only be exempted
from filing a bond and judicial authorization, but their acts as legal administrators are only limited to acts of management or
administration and not to acts of encumbrance or disposition.

PHILAMLIFE V. PINEDA - LIFE INSURANCE

Facts:
> On Jan. 15 1963, Dimayuga processed an ordinary life insurance policy from Philamlife and designated his wife and children as
irrevocable beneficiaries.
> On Feb. 22, 1980, Dimayuga filed a petition in court to amend the designation of the beneficiaries in his policy from irrevocable to
revocable.
> Lower Court granted the petition.

Issue:
Whether or not the court erred in granting Dimayugas petition.

Held: YES.
Under the Insurance Act, the beneficiary designated in a life insurance contract cannot be changed without the consent of the
beneficiary because he has a vested interest in the policy. The policy contract states that the designation of the beneficiaries is
irrevocable. Therefore, based on the said provision of the contract, not to mention the law then applicable, it is only with the
consent of all the beneficiaries that any change or amendment in the policy may be legally and validly effected. The contract
between the parties is the law binding on them. (This case rule is no longer controlling under the Insurance Code.)

CHA V. CHA (OR SPS. CHA VS. COURT OF APPEALS) - INSURABLE INTEREST

Facts:
> Spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into a lease contract with CKS Development Corporation (CKS), as lessor.

> One of the stipulations of the one (1) year lease contract states: "18.
. . . 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 and approval of the LESSOR. If the LESSEE obtain(s) the insurance thereof without the consent of the LESSOR then
the policy is deemed assigned and transferred to the LESSOR for its own benefit; . . ."
> Notwithstanding the above stipulation, the Cha spouses insured against loss by fire their merchandise inside the leased premises
for Five Hundred Thousand (P500,000.00) with the United Insurance without the written consent CKS.
> On the day that the lease contract was to expire, fire broke out inside the leased premises. When CKS learned of the insurance
earlier procured by the Cha spouses (without its consent), it wrote the United a demand letter asking that the proceeds of the
insurance contract (between the Cha spouses and United) be paid directly to CKS, based on its lease contract with the Cha spouses.
> United refused to pay CKS, alleging that the latter had no insurable interest. Hence, the latter filed a complaint against the Cha
spouses and United.

Issue:
Whether or not CKS can claim the proceeds of the fire insurance.
Held:
NO. CKS has no insurable interest.
Sec. 18 of the Insurance Code provides:
"Sec. 18. No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an
insurable interest in the property insured."

A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over their merchandise is primarily a contract
of indemnity. Insurable interest in the property insured must exist at the time the insurance takes effect and at the time the loss
occurs. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person
from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in
case of loss of the property.

In the present case, it cannot be denied that CKS has no insurable interest in the goods and merchandise inside the leased premises
under the provisions of Section 17 of the Insurance Code which provide:
"Section 17.
injury thereof."

The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of

Therefore, CKS cannot, under the Insurance Code a special law be validly a beneficiary of the fire insurance policy taken by the
petitioner-spouses over their merchandise. This insurable interest over said merchandise remains with the insured, the Cha spouses.
The automatic assignment of the policy to CKS under the provision of the lease contract previously quoted is void for being contrary
to law and/or public policy. The proceeds of the fire insurance policy thus rightfully belong to the spouses Nilo Cha and Stella Uy-Cha
(herein co-petitioners). The insurer (United) cannot be compelled to pay the proceeds of the fire insurance policy to a person (CKS)
who has no insurable interest in the property insured.
ONG LIM SING, JR. vs. FEB LEASING AND FINANCE CORPORATION
FACTS:

On March 9, 1995, FEB Leasing and Finance Corporation entered into a lease of equipment and motor vehicles with JVL Food
Products. On the same date, Vicente Ong Lim Sing, Jr. executed an Individual Guaranty Agreement with FEB to guarantee the
prompt and faithful performance of the terms and conditions of the aforesaid lease agreement. Corresponding Lease Schedules with
Delivery and Acceptance Certificates over the equipment and motor vehicles formed part of the agreement. Under the contract, JVL
was obliged to pay FEB an aggregate gross monthly rental of One Hundred Seventy Thousand Four Hundred Ninety-Four Pesos
(P170,494.00).
JVL defaulted in the payment of the monthly rentals. As of July 31, 2000, the amount in arrears, including the penalty charges and
insurance premiums, amounted to Three Million Four Hundred Fourteen Thousand Four Hundred Sixty-Eight and 75/100 Pesos
(P3,414,468.75). On August 23, 2000, FEB sent a letter to JVL demanding payment of the said amount. However, JVL failed to pay.
On December 6, 2000, FEB filed a Complaint with the Regional Trial Court of Manila for sum of money, damages, and replevin against
JVL, Lim, and John Doe.
In an Amended Answer, JVL and Lim admitted the existence of the lease agreement but asserted that it is in reality a sale of
equipment on instalment basis, with FEB acting as the financier. On November 22, 2002, the trial court ruled in favor of JVL and Lim
and stressed the contradictory terms found in the lease agreement. The trial court stated, among others, that if JVL and Lim (then
defendants) were to be regarded as only a lessee, logically the lessor who asserts ownership will be the one directly benefited or
injured and therefore the lessee is not supposed to be the assured as he has no insurable interest.
On December 27, 2002, FEB filed its Notice of Appeal. Accordingly, on January 17, 2003, the court issued an Order elevating the
entire records of the case to the Court of Appeals. On March 15, 2005, the Court of Appeals issued its Decision declaring the
transaction between the parties as a financial lease agreement. The said decision reversed and set aside the trial courts decision
dated November 22, 2002. Hence, Lim filed the present Petition for Review on Certiorari.
ISSUE:
Whether or not petitioner has an insurable interest in the equipment and motor vehicles leased.
RULING: Yes.
The stipulation in Section 14 of the leased contract, that the equipment shall be insured at the cost and expense of the lessee
against loss, damage, or destruction from fire, theft, accident, or other insurable risk for the full term of the lease, is a binding and
valid stipulation. Petitioner, as a lessee, has an insurable interest in the equipment and motor vehicles leased. Section 17 of the
Insurance Code provides that the measure of an insurable interest in property is the extent to which the insured might be damnified
by loss or injury thereof. It cannot be denied that JVL will be directly damnified in case of loss, damage, or destruction of any of the
properties leased.

6. BACHRACH V. BRITISH AMERICAN INSURANCE CO. - INSURANCE PROCEEDS

17 PHIL 555
Facts:
> Bachrach insured properties of its general furniture shop with British. The properties were subsequently destroyed by fire.
> Bachrach claims from the insurance company. The claim was denied on the ff grounds:
o

The policy was allegedly forfeited because the insured stored varnishes and paints within the premises;

Insured stored gasoline in the building; and

Bachrach executed a chattel mortgage on the properties insured without the consent of the insured.

Issue:
Whether or not Bachrach can claim the proceeds of the policy.

Held:
Yes.
The policy
paints and
within the
prohibition

7.

was NOT forfeited due to the strong paints and varnishes. There was no express provision pertaining to it and these
varnishes are incidental to the business of the insured to keep the furniture in a saleable condition. The gasoline stored
premises was in the reservoir of the car and thus does not violate any provision in the policy. There is no express
against the execution of a chattel mortgage on the property insured.

San Miguel Brewery v. Law Union Rock Insurance Company40 PHIL 674

Facts:
On Jan. 12, 1918, Dunn mortgaged a parcel of land to SMB to secure a debt of 10T.
Mortgage contract stated that Dunn was to have the property insured at his own expense, authorizingSMB to choose the insurers
and to receive the proceeds thereof and retain so much of the proceeds aswould cover the mortgage debt.
Dunn likewise authorized SMB to take out the insurance policy for him.
Brias, SMBs general manager, approached Law Union for insurance to the extent of 15T upon theproperty. In the application, Brias
stated that SMBs interest in the property was merely that of amortgagee.
Law Union, not wanting to issue a policy for the entire amount, issued one for P7,500 and procuredanother policy of equal amount
fro
m Filipinas Cia de Seguros. Both policies were issued in the name of SMB only and contained no reference to any other
interests in the propty. Both policies requiredassignments to be approved and noted on the policy.
Premiums were paid by SMB and charged to Dunn. A year later, the policies were renewed.
In 1917, Dunn sold the property to Harding, but no assignment of the policies was made to the latter.
Property was destroyed by fire. SMB filed an action in court to recover on the policies. Harding wasmade a defendant because by
virtue of the sale, he became the owner of the property, although thepolicies were issued in SMBs name.
SMB sought to recover the proceeds to the extent of its mortgage credit with the balance to go toHarding.
Insurance Companies contended that they were not liable to Harding because their liability under thepolicies was limited to the
insurable interests of SMB only.
SMB eventually reached a settlement with the insurance companies and was paid the balance of itsmortgage credit. Harding was
left to fend for himself. Trial court ruled against Harding. Hence theappeal.
Issue:
WON the insurance companies are liable to Harding for the balance of the proceeds of the 2 policies.
Held: NOPE.
Under the Insurance Act, the measure of insurable interest in the property is the extent to which the insured might be daminified by
the loss or injury thereof. Also it is provided in the IA that the insurance shallbe applied exclusively to the proper interest of the
person in whose name it is made. Undoubtedly, SMB as the mortgagee of the property, had an insurable interest therein; but it could
NOT, an any event, recover upon the two policies an amount in excess of its mortgage credit .By virtue of the Insurance Act, neither
Dunn nor Harding could have recovered from the two policies. With respect to Harding, when he acquired the property, no change or
assignment of the policies had been undertaken. The policies might have been worded differently so as to protect the owner, but this
was not done. If the wording had been:
Payable to SMB, mortgagee, as its interests may appear, remainder to whomsoever, during the continuance of the risk, may become
owner of the interest insured
, it would haveproved an intention to insure the entire interest in the property, NOT merely SMBs and would have shown towhom the
money, in case of loss, should be paid. Unfortunately, this was not what was stated in the policies.If during the negotiation for the
policies, the parties had agreed that even the owners interest would becovered by the policies, and the policies had inadvertently
been written in the form in which they wereeventually issued, the lower court would have been able to order that the contract be

reformed to give effectto them in the sense that the parties intended to be bound. However, there is no clear and satisfactory proof
that the policies failed to reflect the real agreement between the parties that would justify the reformation of these two contracts.

8.

Heirs of Loreto C. Maramag represented by surviving spouse Vicente Pangilinan Maramag v. Eva Verna De
Guzman Maramag, et al, G.R. No. 181132, June 5, 2009

FACTS:
Petitioners filed with the RTC Branch 29 with a prayer for a TRO and a writ of preliminary injunction alleging that they were the
legitimate wife and children of Loreto Maramag (Loreto), while respondents were Loretos illegitimate family; Eva de Guzman
Maramag (Eva) was a concubine of Loreto and a suspect in the killing of the latter, thus she is disqualified to receive any proceeds
from hisinsurance policies from Insular Life Assurance, Ltd. (Insular) and the Great Pacific Life Assurance Corporation (Grepalife); the
illegitimate children of Loreto Odessa, Karl, Brian and Trisha Angelie were entitled only to one-half of the legitime children, thus
petitioners could not be deprived of their legitimes, which should be satisfied first.
In answer, Insular admitted that Loreto misrepresented Eva as his legitimate wife and Odessa, Karl, Brian and Trisha Angelie as the
remaining beneficiary as his legitimate children. That when it ascertained that Eva was not the legal wife of Loreto. It disqualified her
as beneficiary and divided the proceeds among the illegitimate children as designated beneficiaries. The complaint or petition to
declare the designation of Eva as beneficiary is void, because Loreto revoked her designation as such in Policy No. A001544070 and
it disqulified her in Policy No. A001693029. And insofar as the petition sought to declare as inofficious the shares of illegitimate
children, Insular claimed that it was bound to honor the insurance policies designating the children of Loreto with Eva as beneficiaries
pursuant to Section 53 of the Insurance Code.

9.

Violeta R. Lalican v. Insular Life Assurance Co. Ltd.

Facts: Eulogio Lalican applied for an insurance policy with the Insular Life amounting to Php 1,500,000.Under the terms of the
policy, Eulogio was to pay the premiums on a quarterly basis, having a grace period of 31 days, for the payment of each premium
subsequent to the first. If any premium was not paid on or before the due date, the policy would be in default and if the premium
remained unpaid until the end of the grace period, the policy would automatically lapse and become void. Eulogio paid the premiums
due on the first two succeeding payment dates but failed to pay subsequent premiums even after the lapse of the grace period
thereby rendering the policy void. He submitted an application for reinstatement of policy through Josephine Malaluan, an agent of
Insular Life, together with the payment of the unpaid premiums. However, the Insular Life notified him that his application could not
be processed because he failed to pay the overdue interest of the unpaid premiums. On Sept. 17, 1998, Eulogio submitted to
Malaluans house a second application forrein statement including the payment for the overdue interest as well as for the premiums
due for April and July of that year, which was received by Malaluan s husband on her behalf and was thereby issued areceipt for the
amount Eulogio deposited. However, on that same day, Eulogio died of cardio-respiratory arrest secondary to electrocution. Violeta,
Eulogios widow filed with the Insular Life a claim for payment of the full proceeds of the policy but the latter informed her that the
claim could not be granted since at the time of Eulogios death, his policy has already lapsed and he failed to reinstate the same.
Violeta requested are consideration of her claim but the same was also rejected. Therefore, she filed a complaint for death claim
benefits with the RTC alleging the unfair claim settlement practice of Insular Life and its deliberatefailure to act with reasonable
promptness on her insurance claim. The trial court rendered a decision infavour of Insular Life and after the former denied her
motion for reconsideration, she directly elevatedher case to the Supreme Court via the petition for review on Certiorari.
Issue: Whether or not the policy of Eulogio was reinstated before his death.
Ruling: To reinstate a policy means to restore the same to preium-paying status after it has beenpermitted to lapse. Both the policy
contract and application for reinstatement provide for specificconditions for the reinstatement of a lapsed policy.According to the
Application for Reinstatement, the policy would only be considered reinstatedupon the approval of the application by Insular Life
during
the
applicants
lifetime
and
good
health
Eulogios death, just hours after filing his Application for Reinstatement and depositing his payment for overdue premiums and
interests with Malaluan, does not constitute a special circumstance that can persuade this Court to already consider Policy No.
9011992 reinstated. Said circumstance cannot override the clear and express provisions of the Policy Contract and Application for
Reinstatement, and operate to remove the prerogative of Insular Life thereunder to approve or disapprove the Application for
Reinstatement. Even though the Court commiserates with Violeta, as the tragic and fateful turn of events leaves her practically
empty-handed, the Court cannot arbitrarily burden Insular Life with the payment of proceeds on a lapsed insurance policy. Justice
and fairness must equally apply to all parties to a case. Courts are not permitted to make contracts for the parties. The function and
duty
of
the
courts
consist
simply
in
enforcing
and
carrying
out
the
contracts
actually
made.

10. GAISANO CAGAYAN v. INSURANCE CO. OF NORTH AMERICAGR No. 147839June 08, 2006

FACTS:
Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. While Levi Strauss (Phils.)Inc. (LSPI) is the local
distributor of products bearing trademarks owned by Levi Strauss & Co. IMC andLSPI separately obtained from respondent Insurance
Company of North America (ICNA) fire insurancepolicies for their book debt endorsements related to their ready-made clothing
materials which have beensold or delivered to various customers and dealers of the Insured anywhere in the Philippines which
areunpaid45 days after the time of the loss.Petitioner Gaisano Cagayan, Inc. is a customer and dealer of IMC and LSPI products. It
owns the GaisanoSuperstore Complex which was consumed by fire in 1991. Included in the items destroyed in the fire werestocks of
ready-made clothing materials sold and delivered by IMC and LSPI.Respondent filed a complaint for damages against Gaisano
Cagayan, Inc. alleging that IMC and LSPI filedtheir claims under their respective fire insurance policies which it paid, thus it was
subrogated to their rights.Petitioner averred it not be held liable because the items were destroyed due to fortuitous event or
forcemajeure. The RTC ruled that IMC and LSPI retained ownership of the delivered goods until fully paid, itmust bear the loss (res
perit domino). The CA ruled otherwise and ordered petitioner to pay respondentPhp 2,119,205.60 and Php 535,613.00 the amount
paid by the latter to IMC and LSPI, respectively.
ISSUE
WON respondent may claim against petitioner for the insured debt.
HELD
Yes, but the order to pay Php 535,613 is deleted for lack of factual basis.The insurance policy is clear that the subject of the
insurance is the book debts and not goods sold anddelivered to the customers and dealers of the insured.Under Art. 1504 of the Civil
code, unless otherwise agreed, the goods remain at the seller's risk until theownership therein is transferred to the buyer, but when
the ownership therein is transferred to the buyer thegoods are at the buyer's risk whether actual delivery has been made or not;
except where delivery of thegoods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the
ownership in the goods has been retained by the seller merely to secure performance by thebuyer of his obligations under the
contract, the goods are at the buyer's risk from the time of suchdelivery
.IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until fullpayment of the value of the
delivered goods. Unlike the civil law concept of res perit domino, whereownership is the basis for consideration of who bears the risk
of loss, in property insurance, one's interest isnot determined by concept of title, but whether insured has substantial economic
interest in the property.Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or
personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril mightdirectly damnify the
insured." Parenthetically, under Section 14 of the same Code, an insurable interest inproperty may consist in: (a) an existing
interest; (b) an inchoate interest founded on existing interest; or (c)an expectancy, coupled with an existing interest in that out of
which the expectancy arises
11. Insular v Ebrado G.R. No. L-44059 October 28, 1977
Facts:
J. Martin:
Cristor Ebrado was issued by The Life Assurance Co., Ltd., a policy for P5,882.00 with a rider for Accidental Death.
He designated Carponia T. Ebrado as the revocable beneficiary in his policy. He referred to her as his wife.
Cristor was killed when he was hit by a failing branch of a tree. Insular Life was made liable to pay the coverage in the total amount
of P11,745.73, representing the face value of the policy in the amount of P5,882.00 plus the additional benefits for accidental death.
Carponia T. Ebrado filed with the insurer a claim for the proceeds as the designated beneficiary therein, although she admited that
she and the insured were merely living as husband and wifewithout the benefit of marriage.
Pascuala Vda. de Ebrado also filed her claim as the widow of the deceased insured. She asserts that she is the one entitled to the
insurance proceeds.
Insular commenced an action for Interpleader before the trial court as to who should be given the proceeds. The court declared
Carponia as disqualified.
Issue: WON a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the proceeds
in case of death of the latter?
Held: No. Petition
Ratio:
Section 50 of the Insurance Act which provides that "the insurance shall be applied exclusively to the proper interest of the person in
whose name it is made"
The word "interest" highly suggests that the provision refers only to the "insured" and not to the beneficiary, since a contract of
insurance is personal in character. Otherwise, the prohibitory laws against illicit relationships especially on property and descent will
be rendered nugatory, as the same could easily be circumvented by modes of insurance.

When not otherwise specifically provided for by the Insurance Law, the contract of life insurance is governed by the general rules of
the civil law regulating contracts. And under Article 2012 of the same Code, any person who is forbidden from receiving any donation
under Article 739 cannot be named beneficiary of a fife insurance policy by the person who cannot make a donation to him.
Common-law spouses are barred from receiving donations from each other.
Article 739 provides that void donations are those made between persons who were guilty of adultery or concubinage at the time of
donation.
There is every reason to hold that the bar in donations between legitimate spouses and those between illegitimate ones should be
enforced in life insurance policies since the same are based on similar consideration. So long as marriage remains the threshold of
family laws, reason and morality dictate that the impediments imposed upon married couple should likewise be imposed upon extramarital relationship.
A conviction for adultery or concubinage isnt required exacted before the disabilities mentioned in Article 739 may effectuate. The
article says that in the case referred to in No. 1, the action fordeclaration of nullity may be brought by the spouse of the donor or
donee; and the guilty of the donee may be proved by preponderance of evidence in the same action.
The underscored clause neatly conveys that no criminal conviction for the offense is a condition precedent. The law plainly states that
the guilt of the party may be proved in the same acting fordeclaration of nullity of donation. And, it would be sufficient if evidence
preponderates.
The insured was married to Pascuala Ebrado with whom she has six legitimate children. He wasalso living in with his common-law
wife with whom he has two children.

12. GARCIA V. HONGKONG FIRE AND MARINE INSURANCE CO. - WRONG POLICY
45 PHIL 122
Facts:
> Garcia had his merchandise insured by Hongkong Fire and Marine Insurance Co.
> The insurance company however made a mistake and issued a policy covering the building where the merchandise was stored.
(The building was not owned by Garcia)
> The policy was written in English, of which Garcia was ignorant, so he could not have noticed the error of the insurance company.
> Said policy was later on assigned by Garcia to PNB to secure a loan. PNB acknowledged receipt of said policy, referring to it as a
policy covering the merchandise.
> The insurance company made the necessary endorsements to PNB.
> The building which housed the merchandise was later razed by fire. The insurance company refused to pay due to the fact that
the policy indicates insurance on the building and not on the merchandise.
Issue:
Whether or not Garcia can collect.
Held:
YES.
The defense of the insurer is purely technical. The mistake was obviously on the part of the insurer when it issued a wrong policy. It
cannot deny such allegation due to the fact that it even confirmed with PNB the nature of said policy when it was endorsed. Garcia
could not have noticed the mistake due to his ignorance of the English language.

13. RCBC V. CA - INSURANCE PROCEEDS

289 SCRA 292 (1998)
Facts:

> GOYU applied for credit facilities and accommodations with RCBC. After due evaluation, a credit facility in the amount of P30
million was initially granted. Upon GOYU's application increased GOYU's credit facility to P50 million, then to P90 million, and finally
to P117 million
> As security for its credit facilities with RCBC, GOYU executed two REM and two CM in favor of RCBC, which were registered with
the Registry of Deeds at. Under each of these four mortgage contracts, GOYU committed itself to insure the mortgaged property with
an insurance company approved by RCBC, and subsequently, to endorse and deliver the insurance policies to RCBC.
> GOYU obtained in its name a total of 10 insurance policies from MICO. In February 1992, Alchester Insurance Agency, Inc., the
insurance agent where GOYU obtained the Malayan insurance policies, issued nine endorsements in favor of RCBC seemingly upon
instructions of GOYU
> On April 27, 1992, one of GOYU's factory buildings in Valenzuela was gutted by fire. Consequently, GOYU submitted its claim for
indemnity.
>
MICO denied the claim on the ground that the insurance policies were either attached pursuant to writs of
attachments/garnishments issued by various courts or that the insurance proceeds were also claimed by other creditors of GOYU
alleging better rights to the proceeds than the insured.
> GOYU filed a complaint for specific performance and damages. RCBC, one of GOYU's creditors, also filed with MICO its formal
claim over the proceeds of the insurance policies, but said claims were also denied for the same reasons that AGCO denied GOYU's
claims.
> However, because the endorsements do not bear the signature of any officer of GOYU, the trial court, as well as the Court of
Appeals, concluded that the endorsements are defective and held that RCBC has no right over the insurance proceeds.
Issue:
Whether or not RCBC has a right over the insurance proceeds.
Held:
RCBC has a right over the insurance proceeds.
It is settled that a mortgagor and a mortgagee have separate and distinct insurable interests in the same mortgaged property, such
that each one of them may insure the same property for his own sole benefit. There is no question that GOYU could insure the
mortgaged property for its own exclusive benefit. In the present case, although it appears that GOYU obtained the subject insurance
policies naming itself as the sole payee, the intentions of the parties as shown by their contemporaneous acts, must be given due
consideration in order to better serve the interest of justice and equity.
It is to be noted that 9 endorsement documents were prepared by Alchester in favor of RCBC. The Court is in a quandary how
Alchester could arrive at the idea of endorsing any specific insurance policy in favor of any particular beneficiary or payee other than
the insured had not such named payee or beneficiary been specifically disclosed by the insured itself. It is also significant that GOYU
voluntarily and purposely took the insurance policies from MICO, a sister company of RCBC, and not just from any other insurance
company. Alchester would not have found out that the subject pieces of property were mortgaged to RCBC had not such information
been voluntarily disclosed by GOYU itself. Had it not been for GOYU, Alchester would not have known of GOYU's intention of
obtaining insurance coverage in compliance with its undertaking in the mortgage contracts with RCBC, and verify, Alchester would
not have endorsed the policies to RCBC had it not been so directed by GOYU.
On equitable principles, particularly on the ground of estoppel, the Court is constrained to rule in favor of mortgagor RCBC. RCBC, in
good faith, relied upon the endorsement documents sent to it as this was only pursuant to the stipulation in the mortgage contracts.
We find such reliance to be justified under the circumstances of the case. GOYU failed to seasonably repudiate the authority of the
person or persons who prepared such endorsements. Over and above this, GOYU continued, in the meantime, to enjoy the benefits
of the credit facilities extended to it by RCBC. After the occurrence of the loss insured against, it was too late for GOYU to disown the
endorsements for any imagined or contrived lack of authority of Alchester to prepare and issue said endorsements. If there had not
been actually an implied ratification of said endorsements by virtue of GOYU's inaction in this case, GOYU is at the very least
estopped from assailing their operative effects.
To permit GOYU to capitalize on its non-confirmation of these endorsements while it continued to enjoy the benefits of the credit
facilities of RCBC which believed in good faith that there was due endorsement pursuant to their mortgage contracts, is to
countenance grave contravention of public policy, fair dealing, good faith, and justice. Such an unjust situation, the Court cannot
sanction. Under the peculiar circumstances obtaining in this case, the Court is bound to recognize RCBC's right to the proceeds of the
insurance policies if not for the actual endorsement of the policies, at least on the basis of the equitable principle of estoppel.
GOYU cannot seek relief under Section 53 of the Insurance Code which provides that the proceeds of insurance shall exclusively
apply to the interest of the person in whose name or for whose benefit it is made. The peculiarity of the circumstances obtaining in

the instant case presents a justification to take exception to the strict application of said provision, it having been sufficiently
established that it was the intention of the parties to designate RCBC as the party for whose benefit the insurance policies were
taken out. Consider thus the following:
1.
It is undisputed that the insured pieces of property were the subject of mortgage contracts entered into between RCBC and
GOYU in consideration of and for securing GOYU's credit facilities from RCBC. The mortgage contracts contained common provisions
whereby GOYU, as mortgagor, undertook to have the mortgaged property properly covered against any loss by an insurance
company acceptable to RCBC.
2.
GOYU voluntarily procured insurance policies to cover the mortgaged property from MICO, no less than a sister company of
RCBC and definitely an acceptable insurance company to RCBC.
3.
Endorsement documents were prepared by MICO's underwriter, Alchester Insurance Agency, Inc., and copies thereof were
sent to GOYU, MICO and RCBC. GOYU did not assail, until of late, the validity of said endorsements.
4.
GOYU continued until the occurrence of the fire, to enjoy the benefits of the credit facilities extended by RCBC which was
conditioned upon the endorsement of the insurance policies to be taken by GOYU to cover the mortgaged properties.
This Court can not over stress the fact that upon receiving its copies of the endorsement documents prepared by Alchester, GOYU,
despite the absence written conformity thereto, obviously considered said endorsement to be sufficient compliance with its obligation
under the mortgage contracts since RCBC accordingly continued to extend the benefits of its credit facilities and GOYU continued to
benefit therefrom. Just as plain too is the intention of the parties to constitute RCBC as the beneficiary of the various insurance
policies obtained by GOYU. The intention of the parties will have to be given full force and effect in this particular case. The insurance
proceeds may, therefore, be exclusively applied to RCBC, which under the factual circumstances of the case, is truly the person or
entity for whose benefit the policies were clearly intended.
14. Filipino Merchants Insurance v CA G.R. No. 85141 November 28, 1989
J. Regalado
Facts:
Choa insured 600 tons of fishmeal for the sum of P267,653.59 from Bangkok, Thailand to Manila against all risks under warehouse to
warehouse terms. What was imported in the SS Bougainville was 59.940 metric tons at $395.42 a ton. The cargo was unloaded from
the ship and 227 bags were found to be in bad condition by the arrastre.
Choa made a formal claim against the defendant Filipino Merchants Insurance Company for P51,568.62 He also presented a claim
against the ship, but the defendant Filipino Merchants Insurance Company refused to pay the claim. The plaintiff brought an action
against the company and presented a third party complaint against the vessel and the arrastre contractor.
The court below, after trial on the merits, rendered judgment in favor of private respondent, for the sum of P51,568.62 with interest
at legal rate.
The common carrier, Compagnie, was ordered to pay as a joint debtor.
On appeal, the respondent court affirmed the decision of the lower court insofar as the award on the complaint is concerned and
modified the same with regard to the adjudication of the third-party complaint. A motion for reconsideration of the aforesaid decision
was denied. The AC made Filipino Merchants pay but absolved the common carrier, Compagnie. Hence this petition.
Issues:
1. WON the "all risks" clause of the marine insurance policy held the petitioner liable to the private respondent for the partial loss of
the cargo, notwithstanding the clear absence of proof of some fortuitous event, casualty, or accidental cause to which the loss is
attributable.
2. WON
The Court of Appeals erred in not holding that the private respondent had no insurable interest in the subject
cargo, hence, the marine insurance policy taken out by private respondent is null and void.

Held: No. No. Petition denied.

Ratio:
1. The "all risks clause" of the Institute Cargo Clauses read as follows:

5. This insurance is against all risks of loss or damage to the subject-matter insured but shall in no case be deemed to extend to
cover loss, damage, or expense proximately caused by delay or inherent vice or nature of the subject-matter insured. Claims
recoverable hereunder shall be payable irrespective of percentage.
An "all risks policy" should be read literally as meaning all risks whatsoever and covering all losses by an accidental cause of any
kind. Accident is construed by the courts in their ordinary and common acceptance.
The very nature of the term "all risks" must be given a broad and comprehensive meaning as covering any loss other than a willful
and fraudulent act of the insured. This is pursuant to the very purpose of an "all risks" insurance to give protection to the insured in
those cases where difficulties of logical explanation or some mystery surround the loss or damage to property.
Institute Cargo Clauses extends to all damages/losses suffered by the insured cargo except (a) loss or damage or expense
proximately caused by delay, and (b) loss or damage or expense proximately caused by the inherent vice or nature of the subject
matter insured.
Generally, the burden of proof is upon the insured to show that a loss arose from a covered peril, but under an "all risks" policy the
burden is not on the insured to prove the precise cause of loss or damage for which it seeks compensation. The insured under an "all
risks insurance policy" has the initial burden of proving that the cargo was in good condition when the policy attached and that the
cargo was damaged when unloaded from the vessel. The burden then shifts to the insurer to show the exception to the coverage.
This creates a special type of insurance which extends coverage to risks not usually contemplated and avoids putting upon the
insured the burden of establishing that the loss was due to the peril falling within the policy's coverage; the insurer can avoid
coverage upon demonstrating that a specific provision expressly excludes the loss from coverage.
Under an 'all risks' policy, it was sufficient to show that there was damage occasioned by some accidental cause of any kind, and
there is no necessity to point to any particular cause.
2. Section 13 of the Insurance Code- anyone has an insurable interest in property who derives a benefit from its existence or would
suffer loss from its destruction
Insurable interest in property may consist in (a) an existing interest; (b) an inchoate interest founded on an existing interest; or (c)
an expectancy, coupled with an existing interest in that out of which the expectancy arises.
Choa, as vendee/consignee of the goods in transit, has such existing interest as may be the subject of a valid contract of insurance.
His interest over the goods is based on the perfected contract of sale. The perfected contract of sale between him and the shipper of
the goods operates to vest in him an equitable title even before delivery or before conditions have been performed.
Further, Article 1523 of the Civil Code provides that where, in pursuance of a contract of sale, the seller is authorized or required to
send the goods to the buyer, delivery of the goods to a carrier, for the purpose of transmission to the buyer is deemed to be a
delivery of the goods to the buyer. The Court has heretofore ruled that the delivery of the goods on board the carrying vessels
partake of the nature of actual delivery since, from that time, the foreign buyers assumed the risks of loss of the goods and paid the
insurance premium covering them.

III. INSURABLE INTEREST

A. CONCEPT

1. Definition In general, a person has an insurable interest in the subject matter insured
where he has such a relation or connection with, or concern in, such subject matter that he
derive pecuniary benefit or advantage from its preservation or will suffer pecuniary loss or
damage from its destruction, termination or injury by the happening of the event insured
against.
2. Necessity of Insurable Interest; Consequence of Lack of Secs. 3, 4, 18, and 25,
I.C.

B. IN LIFE

AND

HEALTH INSURANCE

1. Who Has Insurable Interest Sec. 10, I.C.

a. Blood relationship Sec. 10(a), I.C.; Philamcare Health Systems, Inc. v. Court
of Appeals, 379 SCRA 356 (2002); Gercio v. Sun Life Assurance Co. of Canada,
48 Phil. 53 (1925)
b. Education or support Sec. 10(b), I.C.; Art. 195, Family Code
c. Creditor Sec. 10(c), I.C.; Great Pacific Life Assurance Corp. v. Court of
Appeals, 316 SCRA 677 (1999)
d. Pecuniary Interest Sec. 10(d), I.C.; El Oriente, Fabrica de Tabacos, Inc., v.
Posadas, 56 Phil. 147 (1931);
2. When Insurable Interest Must Exist Sec. 19, I.C.
3. Transfer by Will or Succession Upon Death of Insured Sec. 181, I.C.

C. IN PROPERTY INSURANCE
1. Who Has Insurable Interest1 Secs. 13 and 14, I.C.
a.Existing Interest Sec. 14(a), I.C.; Traders Insurance & Surety Co. v. Golangco,
et al., 95 Phil. 824 (1954); Filipino Merchants Insu
rance Co., Inc. v. Court of Appeals, 179 SCRA 638 (1989); Gaisano Cagayan, Inc.
v. Insurance Company of North America, 490 SCRA 286 (2006); Ong Ling Sing
v. FEB Leasing & Finance Corporation, 425 SCRA 333 (2007); Lampano v. Jose,
30 Phil. 537 (1915)
b. Inchoate Interest Sec. 14(b), I.C.
c. Expectancy Secs. 14(c) and 16, I.C.
d. Mortgagor Secs. 8 and 9, I.C.; Art. 2127, Civil Code; San Miguel Brewery v.
Law Union and Rock Insurance Co., 40 Phil. 674 (1920); Saura Import & Export
Co., Inc. v. Philippine International Surety Co., Inc., 8 SCRA 143 (1963);
Palileo v. Cosio, 97 Phil. 919 (1955); Great Pacific Life Assurance Corp. v.
Court of Appeals, 316 SCRA 677 (1999)
1 The test of insurable interest in property is whether the insured has such a right, title, or
interest therein, or relation thereto that he will be benefited by its preservation and continued
existence, or suffer a direct pecuniary loss from its destruction or injury by the peril insured
against (Suter v. Union Surety & Ins. Co., Inc., 51 O.G. 1905 [1954]).

e. Carrier or Depositary Sec. 15, I.C.; Sec. 6, General Bonded Warehouse Act 2; Lopez
v. Del Rosario and Quiogue, 44 Phil. 98 (1922)
2.Measure of Insurable Interest Secs. 17 and 14(a), I.C.; San Miguel Brewery v.
Law Union and Rock Insurance Co., 40 Phil. 674 (1920); Ong Ling Sing v. FEB
Leasing & Finance Corporation, 425 SCRA 333 (2007);
3. Effect of Lack of Insurable Interest Sec. 18, I.C.; Sharuff & Co. v. Baloise Fire
Insurance Co., 64 Phil. 258 (1937); Garcia v. Hongkong Fire & Marine Insurance
Co., 45 Phil. 122 (1923); Cha v. Court of Appeals, 277 SCRA 690 (1997)
4. When Insurable Interest Must Exist Sec. 19, I.C.; Tai Tong Chuache & Co. v.
Insurance Commission, 158 SCRA 366 (1988)
5. Effect of Change of Interest in Thing Insured
a. General rule: suspended Sec. 20, I.C.; San Miguel Brewery v. Law Union and
Rock Insurance Co., 40 Phil. 674 (1920); Bachrach v. British American
Assurance Co., 17 Phil. 555 (1910)
b. Exceptions
i.

Life, accident, and health insurance Sec. 20, I.C.

ii. Change of interest after occurrence of loss Sec. 21, I.C.

iii. Change of interest in things separately insured Sec. 22, I.C.
iv. Transfer of interest by will or succession upon death of insured Sec. 23, I.C.
v. Transfer of interest by one of partners, joint owners, or common owners jointly
insured, to the others Sec. 24, I.C.
vi. Insurance policy framed to insure to benefit of whomsoever becomes owner of thing
insured Sec. 57, I.C.
6. Effect of Transfer of Thing Insured Sec. 58, I.C.; San Miguel Brewery v. Law
Union and Rock Insurance Co., 40 Phil. 674 (1920)

2 Act No. 3893.