Insurance Case Digest: Capital Insurance & Surety Co. Inc. v. Plastic Era Co. Inc (1975)

G.R.No. L-22375    July 18, 1975
Lessons Applicable: Estoppel and credit extension (Insurance)

Laws Applicable: Article 1249 of the New Civil Code

FACTS:

• December 17, 1960: Capital Insurance & Surety Co., Inc. delivered to the respondent Plastic Era Manufacturing Co., Inc. its open Fire Policy insuring its building, equipments, raw materials, products and accessories located at Sheridan Street, Mandaluyong, Rizal between December 15, 1960 1 pm - December 15, 1961 1 pm up to P100,000 but Plastic Era did not pay the premium
• January 8, 1961: Plastic Era delivered to Capital Insurance its partial payment through check P1,000 postdated January 16, 1961
• February 20, 1961: Capital Insurance tried to deposit the check but it was dishonored due to lack of funds.  According to the records, on January 19, 1961 Plastic Era has had a bank balance of P1,193.41
• January 18, 1961: Plastic Era's properties were destroyed by fire amounting to a loss of P283,875.  The property was also insured to Philamgen Insurance Company for P200K.
• Capital Insurance refused Plastic Era's claim for failing to pay the insurance premium
• CFI: favored Capital Insurance
• CA: affirmed

ISSUE: W/N there was a valid insurance contract because there was an extention of credit despite failing to encash the check payment

HELD: YES. Affirmed

• Article 1249 of the New Civil Code
• The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired
• Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within 30 days from the effective date of policy. Considering that the insurance policy is silent as to the mode of payment, Capital Insurance is deemed to have accepted the promissory note in payment of the premium. This rendered the policy immediately operative on the date it was delivered.
• By accepting its promise to pay the insurance premium within thirty (30) days from the effectivity date of the policy — December 17, 1960 Capital Insurance had in effect extended credit to Plastic Era.
• Where credit is given by an insurance company for the payment of the premium it has no right to cancel the policy for nonpayment except by putting the insured in default and giving him personal notice
• Having held the check for such an unreasonable period of time, Capital Insurance was estopped from claiming a forfeiture of its policy for non-payment even if the check had been dishonored later.

Insurance Case Digest: Philippine Phoenix Surety & Insurance Co. v. Woodworks Inc (1979)

G.R. No. L-25317 August 6, 1979
Lessons Applicable: Estoppel and credit extension (Insurance)

Laws Applicable: Section 77 of the Insurance Code

FACTS:

• July 21, 1960: Woodworks, Inc. was issued a fire policy for its building machinery and equipment by Philippine Phoenix Surety & Insurance Co. for P500K covering July 21, 1960 to July 21, 1961.  Woodworks did not pay the premium totalling to P10,593.36.
• April 19, 1961: It was alleged that Woodworks notified Philippine Phoenix the cancellation of the Policy so Philippine Phoenix credited P3,110.25 for the unexpired period of 94 days and demanded in writing the payment of P7,483.11 
• Woodworks refused stating that it need not pay premium "because the Insurer did not stand liable for any indemnity during the period the premiums were not paid." 
• Philippine Phoenix filed with the CFI to recover its earned premium of P7,483.11
• Woodworks: to pay the premium after the issuance of the policy put an end to the insurance contract and rendered the policy unenforceable
• CFI: favored Philippine Phoenix

ISSUE: W/N there was a valid insurance contract despite no premium payment was paid

HELD: NO. Reversed

• Policy provides for pre-payment of premium. To constitute an extension of credit there must be a clear and express agreement therefor and there nust be acceptance of the extension - none here
• Since the premium had not been paid, the policy must be deemed to have lapsed.
• failure to make a payment of a premium or assessment at the time provided for, the policy shall become void or forfeited, or the obligation of the insurer shall cease, or words to like effect, because the contract so prescribes and because such a stipulation is a material and essential part of the contract. This is true, for instance, in the case of life, health and accident, fire and hail insurance policies
• Explicit in the Policy itself is plaintiff's agreement to indemnify defendant for loss by fire only "after payment of premium" Compliance by the insured with the terms of the contract is a condition precedent to the right of recovery.
• The burden is on an insured to keep a policy in force by the payment of premiums, rather than on the insurer to exert every effort to prevent the insured from allowing a policy to elapse through a failure to make premium payments. 

Insurance Case Digest: Pacific Timber v. CA (1982)

G.R. No. L-38613  February 25, 1982

Lessons Applicable: Rules on cover notes (if premium CANNOT yet be computed) (Insurance)

Laws Applicable: Section 84 of the Insurance Code

FACTS:

• March 19, l963: Pacific Timber secured temporary insurance from Workmen's Insurance Company, Inc. for its exportation of 1,250,000 board feet of Philippine Lauan and Apitong logs to be shipped from the Diapitan Bay, Quezon Province to Tokyo, Japan.
• Workmen's  issued Cover Note insuring the cargo "Subject to the Terms and Conditions of the Workmen's Insurance Company, Inc."
• April 2, 1963: regular marine cargo policies were issued for a total of 1,195.498 bd. ft.  Due to the bad weather some of the logs were lost during loading operations.  45 pieces of logs were salvaged, but 30 pieces were lost.  Pacific informed Workmen's who refused stating that the logs covered in the 2 marine policies were received in good order at the point of destination and that the cover note was null and void upon the issuance of the Marine Policies
• CFI: cover note is valid
• CA:  reversed

ISSUE: W/N the cover note is valid despite the absence of premium payment upon it

HELD: YES. CA set aside. CFI reinstated

• it was not necessary to ask for payment of the premium on the Cover Note , for the loss insured against having already occurred, the more practical procedure is simply to deduct the premium from the amount due on the Cover Note
• Had all the logs been lost during the loading operations, but after the issuance of the Cover Note, liability on the note would have already arisen even before payment of premium
• cover note as a "binder"
• supported by the doctrine that where a policy is delivered without requiring payment of the premium, the presumption is that a credit was intended and policy is valid
• it sent its adjuster to investigate and assess the loss to determine if petitioner was guilty of delay in communicating the loss but there was none
• Section 84
• Delay in the presentation to an insurer of notice or proof of loss is waived if caused by any act of his or if he omits to take objection promptly and specifically upon that ground

Insurance Case Digest: Philippine Pryce Assurance Corp. v. CA (1994)

G.R. No. 107062 February 21, 1994
Lessons Applicable: Acceptance by obligee by surety bond (Insurance)

Laws Applicable: Sec. 177 of the Insurance Code

FACTS:

• Gegroco, Inc filed for a collection of the issued surety bond for P500K and P1M by Interworld Assurance Corporation (now Philippine Pryce Assurance Corporation) in behalf of its principal Sagum General Merchandise 
• RTC: favored Gegroco, Inc
• CA: affirmed RTC
• Interworld: checks issued by its principal which were supposed to pay for the premiums bounced and it was not yet authorized by the Insurance Commission to issue surety bonds

ISSUE: W/N Interworld Assurance Corp. should be liable for the surety bond that it issued as payment for the premium

HELD: YES. RTC and CA: confirmed

• Interworld did not and never attempted to pay the requisite docket fee and was not present during the scheduled pre-trial so it is as if third-party complaint was never filed
• Sec. 177.   The surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding unless and until the premium therefor has been paid, except where the obligee has accepted the bond, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety
• Interworld's defense that it did not have authority to issue a Surety Bond when it did is an admission of fraud committed against Gegroco.  No person can claim benefit from the wrong he himself committed.  A representation made is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.

Insurance Case Digest: American Home Assurance Co. v. Chua (1999)

G.R. No. 130421  June 28, 1999

Lessons Applicable: Acknowledgement receipt (Insurance)

Laws Applicable: Section 29, Section 66,Section 75, Section 77,Section 78, Section 306 of the Insurance Code

FACTS:

• April 5, 1990: Antonio Chua renewed the fire insurance for its stock-in-trade of his business, Moonlight Enterprises with American Home Assurance Companyby issuing a check of P2,983.50 to its agent James Uy who delivered the Renewal Certificate to him.
• April 6, 1990: Moonlight Enterprises was completely razed by fire with an est. loss of P4,000,000 to P5,000,000
• April 10, 1990: An official receipt was issued and subsequently, a policy was issued covering March 25 1990 to March 25 1991
• Antonio Chua filed an insurance claim with American Home and 4 other co-insurers (Pioneer Insurance and Surety Corporation, Prudential Guarantee and Assurance, Inc. and Filipino Merchants Insurance Co)
• American Home refused alleging the no premium was paid
• RTC: favored Antonio Chua for paying by way of check a day before the fire occurred
• CA: Affirmed 

ISSUE: 
1. W/N there was a valid payment of premium considering that the check was cashed after the occurrence of the fire since the renewal certificate issued containing the acknowledgement receipt
2. W/N Chua violated the policy by his submission of fraudulent documents and non-disclosure of the other existing insurance contracts or “other insurance clause"

HELD:petition is partly GRANTED modified by deleting the awards of P200,000 for loss of profit, P200,000 as moral damages and P100,000 as exemplary damages, and reducing the award of attorney’s fees from P50,000 to P10,000

1. YES. 

• Section 77 of the Insurance Code
• An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against.  Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of life or an industrial life policy whenever the grace period provision applies
• Section 66 of the Insurance Code - not applicable since not termination but renewal
• renewal certificate issued contained the acknowledgment that premium had been paid 
• Section 306 of the Insurance Code provides that any insurance company which delivers a policy or contract of insurance to an insurance agent or insurance broker shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon
• best evidence of such authority is the fact that petitioner accepted the check and issued the official receipt for the payment.  It is, as well, bound by its agent’s acknowledgment of receipt of payment
• Section 78 of the Insurance Code
• An acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of its payment, so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid.
• This Section establishes a legal fiction of payment and should be interpreted as an exception to Section 77 

2. NO.

• purpose for the “other insurance clause”  is to prevent an increase in the moral hazard
• failure to disclose was not intentional and fraudulent
• Section 75
• A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy.
• American Home is estopped because its loss adjusters had previous knowledge of the co-insurers 
• The loss adjuster, being an employee of petitioner, is deemed a representative of the latter whose awareness of the other insurance contracts binds petitioner
• no legal and factual basis for the award of P200,000 for loss of profit
• no such fraud or bad faith = no moral damages
• grant of attorney’s fees as part of damages is the exception rather than the rule
• award attorney’s fees where it deems just and equitable that it be so granted
• reduced to P10,000

Insurance Case Digest: Valenzuela v. CA (1990)

G.R. No. 83122   October 19, 1990

Lessons Applicable: Effect of Non-Payment (Insurance)

Laws Applicable: Art. 19,Art. 20,Art. 21, Art. 2200 of the new Civil Code;Section 77 of the Insurance Code

FACTS:

• Valenzuela, General Agent of Philippine American General Insurance Company, Inc authorized to sell in behalf of Philamgen solicited marine insurance from Delta Motors, Inc. amounting to P4.4M  entitling him to a 32% commission or P1.6M
• 1976-1978: premium payments of P1,946,886 were paid directly to Philamgen.  Philamgen wanted a 50% share of Valenzuela's commission but Valenzuela refused.
• Because of his refusal, the officers of Philamgen reversed his commission due him, placed agency transactions on a cash and carry basis thus removing the 60-day credit for premiums due, threatened to cancel policies issued by his agency and leaked out the news that he has substantial accounts with Philamgen.
• December 27, 1978: His agency with Philamgen was terminated
• Valenzuela sought relief from the RTC
• RTC: favored Valenzuela with reinstatement, commission with interest, monthly compensatory damages, moral damages, attorney's fees and cost of suit
• CA modified by holding Philamgen and Valenzuela jointly and severally liable for the premium

ISSUE: W/N Valuenuela should be NOT be held liable since non-payment of the premium renders the policy invalid

HELD: YES. petition is GRANTED. RTC reinstated with modification that upon satisfaction of the judgment, contractual relationship is terminated

• The principal may not defeat the agent's right to indemnification by a termination of the contract of agency. Where the principal terminates or repudiates the agent's employment in violation of the contract of employment and without cause ... the agent is entitled to receive either the amount of net losses caused and gains prevented by the breach, or the reasonable value of the services rendered. Thus, the agent is entitled to prospective profits which he would have made except for such wrongful termination provided that such profits are not conjectural, or speculative but are capable of determination upon some fairly reliable basis. 
• If a principal violates a contractual or quasi-contractual duty which he owes his agent, the agent may as a rule bring an appropriate action for the breach of that duty. The agent may in a proper case maintain an action at law for compensation or damages 
• question of whether or not the agency agreement is coupled with interest is helpful to the petitioners' cause but is not the primary and compelling reason 
• Section 77 of the Insurance Code, the remedy for the non-payment of premiums is to put an end to and render the insurance policy not binding
• unless premium is paid, an insurance contract does not take effect
• since admittedly the premiums have not been paid, the policies issued have lapsed
• to sue Valenzuela for the unpaid premiums would be the height of injustice and unfair dealing
• Under Article 2200 of the new Civil Code, "indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain."

Insurance Case Digst: Sales de Gonzaga v. Crown Life Insurance Co. (1952)

G.R. No. L-4197    March 20, 1952

Lessons Applicable: Effect of Non-Payment (Insurance)

Laws Applicable: 

FACTS:

• September 26, 1939: Crown Life Insurance Co. whose home office is based in Toronto, Canada issued to Ramon Gonzaga through its branch office in Manila a 20-year endowment policy for P15,000 which had an annual premium of P591. 
• Payment was only until September 6, 1941 because of the outbreak of the war since Crown is an enemy corp. order to be closed during the Japanese occupation.  However, despite that it offered a privilege to accept premium payments in the place of its employee in Ermita but of which Gonzaga did not avail.
• Through the automatic premium loan clause, it continued until June 12, 1943
• May 1, 1945: It reopened but still Gonzaga did not pay although there was a reinstatement clause providing certain conditions within three years from the date of lapse on application of the insured
• June 27, 1945: Gonzaga died from an accident
• Crown refused to pay because of the lapse of premium payment
• RTC: against Gonzaga

ISSUE: W/N Gonzaga's widow can claim despite the absence of premium payment during the outbreak of the war

HELD: NO. Affirmed

• Non-payment at the day involves absolute forfeiture is such be the terms of the contract
• failure to notify the postal address during the war is not an excuse
• There is no duty when the law forbids and there is no obligation without corresponding right enjoyed by another
• opening of an interim office partook of the nature of the privilege to the policy holders to keep their policies operative rather than a duty to them under the contract

Insurance Case Digest: Areola v. CA (1994)

G.R. No. 95641   September 22, 1994

Lessons Applicable: Binding Effect of Payment (Insurance)

Laws Applicable: Art. 1910,Article 1191

FACTS:

• December 17, 1984: Prudential Guarantee And Assurance, Inc. issued collector's provisional receipt amounting to P1,609.65 
• June 29, 1985: 7 months after the issuance of petitioner Santos Areola's Personal Accident Insurance Policy, Prudential Guarantee And Assurance, Inc. unilaterally cancelled it for failing to pay his premiums through its manager Teofilo M. Malapit
• Shocked by the cancellation of the policy, Santos approached Carlito Ang, agent of Prudential and demanded the issuance of an official receipt.  Ang told Santos that it was a mistake and assured its rectification.
• July 15, 1985: Santos demanded the same terms and same rate increase as when he paid the provincial receipt but Malapit insisted that the partial payment he made was exhausted and that he should pay the balance or his policy will cease to operate
• July 25, 1985 : Assistant Vice-President Mariano M. Ampil III apologized 
• August 6, 1985 had filed a complaint for breach of contract with damages before the lower court
• August 13, 1985: Santos received through Carlito Ang the leeter of Assistant Vice-President Mariano M. Ampil III finding error on their part since premiums were not remitted Malapit, proposed to extend its lifetime to December 17, 1985
• RTC: favored Santos - Prudential in Bad Faith
• CA: Reversed - not motivated by negligence, malice or bad faith in cancelling subject policy

ISSUE: W/N the Areolas can file against damages despite the effort to rectify the cancellation

HELD: YES. RTC reinstated

• Malapit's fraudulent act of misappropriating the premiums paid is beyond doubt directly imputable to Prudential
• Art. 1910.  The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.

• Subsequent reinstatement could not possibly absolve Prudential there being an obvious breach of contract
• a contract of insurance creates reciprocal obligations for both insurer and insured
• Article 1191
• choice between fulfillment or rescission of the obligation in case one of the obligors fails to comply with what is incumbent upon him
• entitles the injured party to payment of damages, regardless of whether he demands fulfillment or rescission of the obligation
• Nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind, or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.

Insurance Case Digest: Bachrach v. British American Assurance Co. (1910)

G.R. No. L-5715  December 20, 1910

Lessons Applicable: Effect of Change of Interest in Thing Insured (Insurance)

Laws Applicable: 

FACTS:

• E. M. Bachrach insured goods belonging to a general furniture store, such as iron and brass bedsteads, toilet tables, chairs, ice boxes, bureaus, washstands, mirrors, and sea-grass furniture stored in the ground floor and first story of house and dwelling with an authorized agent of the British American Assurance Company 
• British American Assurance Company denied alleging that:
• property covered by the policy to H. W. Peabody & Co. to secure certain indebtedness due and owing to said company
• interest in certain of the goods covered by the said policy is trasnferred to Macke to secure certain obligations assumed by Macke and on behalf of Bachrach
• willfully placed a gasoline can containing 10 gallons of gasoline close to the insured goods
• made no proof of the loss with the time required by the condition
• RTC: British American Assurance Company liable to bACHRACH  

ISSUE: W/N Bachrach can claim

HELD: YES. lower court affirmed

• keeping of inflammable oils on the premises, though prohibited by the policy, does not void it if such keeping is incidental to the business
• It may be added that there was no provision in the policy prohibiting the keeping of paints and varnishes upon the premises where the insured property was stored. If the company intended to rely upon a condition of that character, it ought to have been plainly expressed in the policy.
• alienation clause - forfeiture if the interest in the property pass from the insured
• there is no alienation within the meaning of the insurance law until the mortgage acquires a right to take possession by default under the terms of the mortgage. No such right is claimed to have accrued in the case at bar, and the alienation clause is therefore inapplicable.
• we can not find that there is a preponderance of evidence showing that the plaintiff did actually set fire or cause fire to be set to the goods in question
• It does not positively appear of record that the automobile in question was not included in the other policies. It does appear that the automobile was saved and was considered as a part of the salvaged. It is alleged that the salvage amounted to P4,000, including the automobile. This amount (P4,000) was distributed among the different insurers and the amount of their responsibility was proportionately reduced. The defendant and appellant in the present case made no objection at any time in the lower court to that distribution of the salvage. The claim is now made for the first time. 

Insurance Case Digest: Tai Tong Chuache & Co. v. Insurance Commission (1988)

G.R. No. L-55397    February 29, 1988

Lessons Applicable: When Insurable Interest Must Exist (Insurance)

Laws Applicable: 

FACTS:

• Azucena Palomo bought a parcel of land and building from Rolando Gonzales and assumed a mortgage of the building in favor of S.S.S. which was insured with S.S.S. Accredited Group of Insurers
• April 19, 1975: Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of P100,000 and to secure it, the land and building was mortgaged
• June 11, 1975: Pedro Palomo secured a Fire Insurance Policy covering the building for P50,000 with Zenith Insurance Corporation
• July 16, 1975: another Fire Insurance policy was procured from  Philippine British Assurance Company, covering the same building for P50,000 and the contents thereof for P70,000
• Before the occurrence of the peril insured against the Palomos had already paid their credit due the
• July 31, 1975: building and the contents were totally razed by fire
• Palomo was able to claim P41,546.79 from Philippine British Assurance Co., P11,877.14 from Zenith Insurance Corporation and P5,936.57 from S.S.S. Group of Accredited Insurers but Travellers Multi-Indemnity refused so it demanded the balance from the other three but they refused so they filed against them
• Insurance Commission, CFI: absolved Travellers on the basis that Arsenio Cua was claiming and NOT Tai Tong Chuache
• Palomo Appealed
• Travellers reasoned that the policy is endorsed to Arsenio Chua,  mortgage creditor
• Tai Tong Chuache & Co. filed a complaint in intervention claiming the proceeds of the fire Insurance Policy issued by travellers
• affirmative defense of lack of insurable interest that before the occurrence of the peril insured against the Palomos had already paid their credit due the petitioner

ISSUE: W/N Tai Tong Chuache & Co. has insurable interest

HELD: YES. Travellers Multi-Indemnity Corporation to pay Tai Tong Chuache & Co.

• when the creditor is in possession of the document of credit, he need not prove non-payment for it is presumed
• The validity of the insurance policy taken b petitioner was not assailed by private respondent. Moreover, petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner
• Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership. Being an agent, it is understood that he acted for and in behalf of the firm
• Upon its failure to prove the allegation of lack of insurable interest on the part of the petitioner, Travellers must be held liable

Insurance Case Digest: Cha v. CA (1997)

G.R. No. 124520  August 18, 1997

Lessons Applicable: Effect of Lack of Insurable Interest (Insurance)

Laws Applicable: Sec. 17, Sec. 18, Sec. 25 of the Insurance Code

FACTS:

• Spouses Nilo Cha and Stella Uy-Cha and CKS Development Corporation entered a 1 year lease contract with a stipulation not to 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.  But it insured against loss by fire their merchandise inside the leased premises for P500,000 with the United Insurance Co., Inc. without the written consent of CKS
• On the day the lease contract was to expire, fire broke out inside the leased premises and CKS learning that the spouses procured an insurance wrote to United to have the proceeds be paid directly to them. But United refused so CKS filed against Spouses Cha and United.
• RTC: United to pay CKS the amount of P335,063.11 and Spouses Cha to pay P50,000 as exemplary damages, P20,000 as attorney’s fees and costs of suit
• CA: deleted exemplary damages and attorney’s fees

ISSUE: W/N the CKS has insurable interest because the spouses Cha violated the stipulation

HELD: NO. CA set aside. Awarding the proceeds to spouses Cha.

• 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 a t 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 such a case, the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code.
• SECTION 25.  Every stipulation in a policy of Insurance for the payment of loss, whether the person insured has or has not any interest in the property insured, or that the policy shall be received as proof of such interest, and every policy executed by way of gaming or wagering, is void
• Section 17.  The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of injury thereof
• 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.  The liability of the Cha spouses to CKS for violating their lease contract in that Cha spouses obtained a fire insurance policy over their own merchandise, without the consent of CKS, is a separate and distinct issue which we do not resolve in this case.

Insurance Case Digest: Garcia v. Hongkong Fire & Marine Insurance Co. (1923)

G.R. No. 20341           September 1, 1923

Lessons Applicable: Effect of Lack of Insurable Interest (Insurance)

Laws Applicable:  

FACTS:

• August 30, 1919: Garcia executed a mortgage to the Philippine National Bank on the merchandise allegedly insured by Hongkong Fire & Marine Insurance Co. and with the consent of the latter endorsed the policy to PNB 
• PNB informed Hongkong Fire through exchange of letters.  Hongkong failed to notify PNB or Garcia that it was for the building and not the merchandise.
• February 6, 1920: Fire took place and destroyed the merchandise so Garcia filed a claim which was refused.
• RTC: favored Garcia

ISSUE: W/N 

HELD: the lower court is affirmed

• as a matter of fair dealing, it should have notified the Bank that the policy was on the building. It will be noted that the letters in question were all written several months before the fire.
• Under these circumstances it seems clear and manifest that the insured, as well as the manager of the National Bank at Legaspi, who was interested in the policy, because the same secured a loan of P6,000 made to Domingo Garcia, and the corporation of Wise & Co., Ltd., which represented the insurance company, have been in the belief that it was not the building but the merchandise that was insured, for the reason that none of them paid attention to the context of the policy.

Insurance Case Digest: Sharuff & Co. v. Baloise Fire Insurance Co. (1937)

G.R. No. 44119             March 30, 1937

Lessons Applicable: Effect of Lack of Insurable Interest (Insurance)

Laws Applicable: 

FACTS:

• Salomon Sharruf and Elias Eskenazi were doing business under the firm name of Sharruf & Co.  They insured their stocks with aloise Fire Insurance Co., Sun Insurance Office Ltd., and Springfield Insurance Co. raising it to P40,000. Elias Eskenazi having paid the corresponding premiums
• Soon they changed the name of their partnership to Sharruf & Eskenazi
• September 22, 1933: A fire ensued at their building at Muelle de la Industria street where petroleum was spilt lasting 27 minutes
• Sharruf & Co. claimed 40 cases when only 10 or 11 partly burned and scorched cases were found
• RTC: ordered Baloise Fire Insurance Co., Sun Insurance Office Ltd., and Springfield Insurance Co., to pay the partners Salomon Sharruf and Elias Eskenazi  P40,000 plus 8% interest

ISSUE: W/N Sharruf & Eskenazi has juridical personality and insurable interest

HELD: YES. Reversd.  Insurance companies are absolved.

• It does not appear that in changing the title of the partnership they had the intention of defrauding the insurance companies
• fire which broke out in the building at Nos. 299-301 Muelle de la Industria, occupied by  Sharruf & Eskenazi but no evidence sufficient to warrant a finding that they are responsible for the fire
• So great is the difference between the amount of articles insured, which the plaintiffs claim to have been in the building before the fire, and the amount thereof shown by the vestige of the fire to have been therein, that the most liberal human judgment can not attribute such difference to a mere innocent error in estimate or counting but to a deliberate intent to demand of the insurance companies payment of an indemnity for goods not existing at the time of the fire, thereby constituting the so-called "fraudulent claim" which, by express agreement between the insurers and the insured, is a ground for exemption of the insurers from civil liability
• acted in bad faith in presenting a fraudulent claim, they are not entitled to the indemnity claimed
• when the partners of a general partnership doing business under the firm name of "Sharruf & Co." obtain insurance policies issued to said firm and the latter is afterwards changed to "Sharruf & Eskenazi", which are the names of the same and only partners of said firm "Sharruf & Co.", continuing the same business, the new firm acquires the rights of the former under the same policies; 

Insurance Case Digest: Lopez v. Del Rosario and Quiogue (1922)

G.R. No. L-19189   November 27, 1922

Lessons Applicable: Carrier or Depositary (Insurance)

Laws Applicable: 

FACTS:

• Benita Quiogue de V. del Rosario (Mrs. del Rosario), owner of a bonded warehouse where Froilan Lopez, holder or 14 waehouse receipts and Elias Zamora had their copra deposited
• The warehouse recipts states an insurance of 1% their declared value which can be increase or decrease by giving 1 month's notice in writing
• Lopez paid the insurance to May 18, 1920, but not thereafter
• June 6, 1920: the warehouse was destroyed by fire.  Only copra worth P49,985 was salvaged.  At that time Lopez was still liable for the storage and insurance of P315.90
• Mrs. Del Rosario submitted the insurance with the arbitrators and seems to have satisfied all of the persons who had copra stored in her warehouse, including the stockholders in the Compañia Coprera de Tayabas (whose stock she took over), with the exception of Froilan Lopez
• Ineffectual attempts by Mrs. Del Rosario to effect a compromise with Lopez first for P71,994, later raised to P72,724, and finally reduced to P17,000, were made. But Lopez stubbornly contended, or, at least, his attorney contended for him, that he should receive not a centavo less than P88,595.43 (from originally P107,990.40)

ISSUE: W/N Mrs. Del Rosario should be held liable to Lopez even if he has not paid the insurance at the time of the fire

HELD: YES.  entitled to P88,595.43 minus P7,185.88, his share of the expenses, minus P315.90, due for insurance and storage, or approximately a net amount of P81,093.65, with legal interest