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Insurance Case Digest: Filipinas Compania de Seguros v. Christern Henefeld and Co. (1951)

G.R. No. L-2294             May 25, 1951
Lessons Applicable: Disqualification: Public Enemy (Insurance)

  • October 1, 1941: Christern Huenefeld and co., inc. (Christern), a company whose major stockholders are German, paid P1M and obtained a fire policy from Filipinas Cia. de Seguros (Filipinas)
  • December 10, 1941: U.S. declared a war against Germany
  • February 27, 1942 (during the japanese occupation): the building and insured merchandise were burned
    • their claimed from Filipinas and the salvage goods were auctioned for P92,650 who refused since Christen was organized under the Philippine laws, it was under American jurisdiction which is an enemy of the Germans
  • April 9, 1943: The Director of Bureau of Financing ordered Filipinas to pay the P92,650 to Christen and it did. 
  • Filipinas filed with the CFI the P92,650 paid to Christern
  • CA affirmed CFI: dismissed the action
  • Filed a petition for certiorari
ISSUE: W/N Christern is a public enemy and therefore ceased to be insured

HELD: YES. Ordered to pay Filipinas P77,208.33, Philippine currency, less the amount of the premium, in Philippine currency, that should be returned by the Filipinas  for the unexpired term of the policy in question, beginning December 11, 1941
  • Philippine Insurance Law (Act No. 2427, as amended,) in section 8, provides that "anyone except a public enemy may be insured
  • Effect of war, generally. — All intercourse between citizens of belligerent powers which is inconsistent with a state of war is prohibited by the law of nations. Such prohibition includes all negotiations, commerce, or trading with the enemy; all acts which will increase, or tend to increase, its income or resources; all acts of voluntary submission to it; or receiving its protection; also all acts concerning the transmission of money or goods; and all contracts relating thereto are thereby nullified. It further prohibits insurance upon trade with or by the enemy, upon the life or lives of aliens engaged in service with the enemy; this for the reason that the subjects of one country cannot be permitted to lend their assistance to protect by insurance the commerce or property of belligerent, alien subjects, or to do anything detrimental too their country's interest. The purpose of war is to cripple the power and exhaust the resources of the enemy, and it is inconsistent that one country should destroy its enemy's property and repay in insurance the value of what has been so destroyed, or that it should in such manner increase the resources of the enemy, or render it aid, and the commencement of war determines, for like reasons, all trading intercourse with the enemy, which prior thereto may have been lawful. All individuals therefore, who compose the belligerent powers, exist, as to each other, in a state of utter exclusion, and are public enemies
  • In the case of an ordinary fire policy, which grants insurance only from year, or for some other specified term it is plain that when the parties become alien enemies, the contractual tie is broken and the contractual rights of the parties, so far as not vested.
  • However, elementary rules of justice (in the absence of specific provision in the Insurance Law) require that the premium paid by the respondent for the period covered by its policy from December 11, 1941, should be returned by the petitioner