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Insurance Case Digest: Traders Insurance & Surety Co. v. Golangco, et al (1954)

G.R. No. L-6442    Sep 21, 1954
Lessons Applicable: Existing Interest (Insurance)
Laws Applicable: Sec. 13 of the Insurance Code 

  • Tomas Lianco and the Archbishop entered into a contract of lease on a parcel of landowned by church 
  • As lessee, Lianco erected a building on the leased portion of the church’s land. 
  • Lianco transferred ownership of this building to Kaw Eng Si,who later transferred the same to Golangco.
    • Transfers were made without the consent of the Archbishop
  • The Archbishop filed an ejectment case against Lianco, who appears to be occupants of the premises building with others paying rent to Golangco.
    • The right of Golangco to receive rent on the building was judicially recognized in a case decided between Lianco and others occupying the premises pursuant to a compromise agreement.
  • The Archbishop did not exercise his option to question Golangco’s rights as lessee
  • April 7,1949: Golangco applied for fire insurance with Trader’s Insurance and Surety Co. 
    • fire insurance policy states: "that all insurancecovered under said policy, includes the 'rent or othersubject matter of insurance in respect of or inconnection with any building or any property contained in any building"
  • June 5, 1949: the building premises was burned so  Golangco requested Trader’s Insurance to pay the insurance amount of 10,000 including the amount of rent P1,100 monthly. 
    • Trader’s insurance refused to pay the insurance for the rent averring that Golangco has no insurable interest 
ISSUE: W/N Golangco has insurable interest on the rent of the building premises which may lawfully/validly be subject of insurance?

  • Sec. 13 of the Insurance Code 
Every interest in the property, whether real or personal, or any relation thereto, or liability in respect thereof of such nature that a contemplated peril might directly damnify the insured, is an insurable interest.
  • Both at the time of the issuance of the policy and at the time of the fire, Golangco was in legal possession of the premises, collecting rentals from its occupant.
  • The argument of Trader’s Insurance that a policy of insurance must specify the interest of the insured in the property insured, if he is not the absolute owner thereof, is not meritorious because it was the Trader’s, not Golangco, who prepared that policy, and it cannot take advantage of its own acts to plaintiff's detriment; and, in any case, this provisionwas substantially complied with by Golangco when he made a full and clear statement of his interests to Trader's manager.  
    • The contract between Lianco and the Archbishop only forbade Lianco from transferring 'his rights as LESSEE but the contracts Lianco made in favor of Kaw Eng Siand plaintiff Golangco did not transfer such rights; hence no written consent thereto was necessary. At worst, the contract would be voidable, but not a void contract, at the option of the Archbishop and it does not appear that it was ever exercised