FILIPINAS COMPANIA VS CHRISTERN, HUENEFELD AND CO.

FACTS:
1. Christern obtained from Filipinas a fire policy for P1000 for its merchandise
2. During the Japanese Occupation, the building and merchandise were burned
a. Total loss was P92,650
b. Filipinas refused to pay because the policy ceased to be in force upon
declaration by the US war against Germany
i. Because Christern is controlled by German subjects and Filipinas was
incorporated in the US
c. However, upon order of the Bureau of Financing, Filipinas paid
3. Filipinas filed an action to recover the money it paid from Christern- CFI
dismissed
a. CA affirmed

ISSUE: WON Filipinas may recover what it paid to Christern. YES

1. The Philippine Insurance Law (Act No. 2427, as amended,) in section 8, provides
that "anyone except a public enemy may be insured." It stands to reason that an
insurance policy ceases to be allowable as soon as an insured becomes a public
enemy.
a. 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
b. 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.
2. The respondent having become an enemy corporation on December 10, 1941,
the insurance policy issued in its favor on October 1, 1941, by the petitioner (a
Philippine corporation) had ceased to be valid and enforcible, and since the
insured goods were burned after December 10, 1941, and during the war, the
respondent was not entitled to any indemnity under said policy from the
petitioner.
3. However, in the interest of justice, the premiums paid must be returned to
Christern.

1
 CONSTANTINO V. ASIA LIFE INSURANCE COMPANY
G.R. No. 1669, August 31, 1950
FACTS:
1. In the first case (G.R. No. L-1669, August 31, 1950), respondent Corporation
was paid P176.04 as annual premium by Arcadio Constantino in exchange
for policy no. 93212 in 1941 for P 3,000 which lasted for 20 years. Petitioner
Paz Constantino was made beneficiary. However after the first payment, no
further premiums were made. Thereafter the insured died on 1944.
2. Later, due to the war (Japanese occupation) Respondent Corporation had to
close down its branch in the country.
3. In the second case (G.R. No. L-1670,August 31, 1950), in the same
way, respondent Corporation issued in 1938 another insurance policy no.
78145 for Spouses Ruiz and Peralta also for P 3,000, lasting for 20 years.
4. Due to Jap occupation, it became impossible and illegal for the insured to
deal with ALIC. Aside from this the insured borrowed from the policy
P234.00 such that the cash surrender value of the policy was sufficient to
maintain the policy in force only up to Sept. 7, 1942.
5. Both policies contained this provision: All premiums are due in advance and
any unpunctuality in making such payment shall cause this policy to lapse
unless and except as kept in force by the grace period condition.
6. Paz Constantino and Agustina Peralta claim as beneficiaries, that they are
entitled to receive the proceeds of the policies less all sums due for
premiums in arrears. They also allege that non-payment of the premiums
were caused by the closing of ALICs offices during the war and the
impossible circumstances by the war, therefore, they should be excused and
the policies should not be forfeited. Ruiz died on 1945. Peralta was the
beneficiary. In both cases the plaintiffs demanded payment but was refused
due to Respondent Corporations refusal on the ground of non-payment of
the premiums. Lower court favored Respondent.
ISSUES:
1. Whether the beneficiaries are entitled to recover the amount insured despite
non-payment caused by the Japanese occupation? NO.
2. Whether the periodic payments of the premiums, those after the first, is not
an obligation of the insured so that it is not a debt enforceable by the action
of the insurer? NO.
HELD:
1. No, the beneficiaries are not entitled to recover for non-payment despite the
presence of war. Due to the express terms of the policy, non-payment of the premium
produces its avoidance.
Moreover, since act 2427, Philippine law on insurance and the Civil Code) are mostly
based from the Civil Code of California, An intention to supplement our laws with the
prevailing principles of the US arises. Thus, Prof. Vance of Yaled declares that the
United States Rule must be followed, where the contract is not merely suspended
but is abrogated by reason of non-payment of premiumssince the time of payments is
peculiar to the essence of the contract. Further it would be unjust to permit the
insurer to retain the reserve value of the policy or the excess of premiums paid over
the actual risk when the policy was still effective as held in the Statham Case which
was more logical and juridically sound. In said case it was hold that promptness of
payment is essential in the business oflife insurance since all calculations of the
company is based on the hypothesis of prompt payments. Forfeiture for non-payment
is necessary to protect said business from embarrassment otherwise confusion would
abound. And that delinquency cannot be tolerated nor redeemed except at the option
of the company. Lastly parties contracted both for peace and war times since the
policies contained also wartime days. It follows that the parties contemplated
uninterrupted operation of the contract even if armed conflict ensues. When the life
insurance policy provides that non-payment of premiums will cause its forfeiture, war
does NOT excuse non-payment and does not avoid forfeiture.
2. No, the annual premium is not a debt, nor is it an obligation which the insurer can
maintain an action against the insured; nor its settlement governed by the rules on
payment of debts. A contract of insurance is sui generis. Though the insured may
hold the insurer to the contract by the fulfillment of the condition, the latter has no
power or right to compel the insured to maintain the contract relation longer than the
insured may desire. It is optional upon the insured.

Contracts of insurance are contracts of indemnity within the terms and condition
found therein. An insurance company for certain considerations guarantee the
insured against loss or damage as may be stipulated, and when called to pay, the
insurer may insist on the fulfillment of said stipulations. Failure of the insured to do so
disqualifies recovery for the loss. Thus the terms of the policy determines the
insurers liability. Compliance to the terms of the policy is a must as it is a condition
precedent to the right of recovery. Therefore, from the terms of the policy it is clear
that non-payment of premium produces avoidance (forfeiture of the policy).

2
 FIDELA SALES DE GONZAGA v. THE CROWN LIFE INSURANCE COMPANY
G.R. No. L-4197 | March 20, 1952

TOPIC: Contract of Insurance Who May Be Insured

EMERGENCY RECIT: Ramon Gonzaga was issued insurance by Crown Life. Before
he could finish paying his premiums, the war broke out, Crown Lifes offices were
closed, and Ramon stopped paying premiums. However, Crown Life resumed
business while Ramon never resumed payments. When Ramon died, Fidela tried to
claim the insurance but was denied. The SC held that jurisprudence shows that non-
payment of premiums due to war ends the contract.

FACTS:
In 1939, Ramon Gonzaga, Fidelas husband, was issued a 20-year
endowment policy from Crown Life. Ramon paid the yearly premium of P591
for three straight years, but stopped after the outbreak of war.
Due to its automatic premium loan clause, the policy was continued in force
up to 12 June 1943. It did, however, carry a clause providing for its
reinstatement under certain conditions within three years from the date of
the lapse (12 June 1943).
The Crown Life offices were ordered closed by the Japanese occupants, but
the officers of Hanson, Orth & Stevenson, Inc., Crown Lifes agents,
continued the insurance work by opening an office in an employees house.
Ramon was not informed of the new address.
Crown Lifes Manila branch reopened on 1 May 1945, in the same building
where Ramon, an employee of the US Navy, would come at least twice a
month for his salary.
Ramon died on 27 June 1945 from an accident. Fidela and another
beneficiary werent able to collect because Crown Life said that the policy
had lapsed due to non-payment of premiums on stipulated dates.

ISSUE: WON Fidela (and the mystery beneficiary) are entitled to the insurance
claims.

HOLDING and RATIO:

No, they are not. Dismissal by the trial court proper.
Through several cases decided by the SC, it has been established that non-
payment of premiums by reason of war puts an end to the contract. This is
because time is material and of the essence of the contract.
Also, failure of Crown Life to inform Ramon of its new address is not a
forfeiture of its right to have premiums satisfied. It was not Crown Lifes
obligation to send out notices of its new address to its policy holders.
There is no duty where the law forbids; and there is no obligation without
corresponding right enjoyed by another.
The opening of the interim offices served as a privilege to the policy holders
(i.e., Ramon Gonzaga) to keep their policies operative; it wasnt Crown
Lifes duty to its policy holders to do so.

3
 CHERIE PALILEO V. BEATRIZ COSIO claim against the mortgagor, but it passes by subrogation to the insurer, to
G.R. No. L-7667, November 28, 1995 the extent of the insurance money paid.
3. The correct solution should be that the proceeds of the insurance should be
Topic: Mortgagor/Mortgagee delivered to the defendant but that her claim against the plaintiff should be
considered assigned to the insurance company who is deemed subrogated
1. Emergency Recit: Palileo obtained a loan from Cosio and secured it with a to the rights of the defendant to the extent of the money paid as indemnity.
residential building. Cosio had the building insured against fire. It was then
destroyed by fire and Cosio collected indemnity from the insurance. Palileo
claims to be credited with the necessary amount to pay her obligation out of
the insurance proceeds but defendant refused to do so. The proceeds of the
insurance should be delivered to the defendant but her claim against the
plaintiff should be considered assigned to the insurance company who is
deemed subrogated to the rights of the defendant to the extent of the money
paid as indemnity.

FACTS:
1. Plaintiff obtained from defendant a loan in the sum of P12,000.
2. 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.
3. After the execution of the aforesaid document, defendant had the building
insured by Associated Insurance and Surety Co. against fire for the sum of
P15,000, the insurance policy having been issued in the name of defendant.
4. The building was partly destroyed by fire and, after proper demand,
defendant collected from the insurance company an indemnity of
P13,107.00.
5. 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:
1. Whether or not a mortgagor is entitled to the insurance proceeds of the
mortgaged property independently insured by the mortgagee?

RULING:
2. 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, 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

4
 SAN MIGUEL BREWERY V LAW UNION AND ROCK INSURANCE
STREET, J; January 19, 1920

FACTS:
1. A certain property of SMB was destroyed by fire. SMB filed a complaint recovering
the sum of P7500 each upon 2 policy insurance issued by Law Union and Rock
Insurance Company and the Filipinas Compania de Seguros.
2. However, it is alleged in the complaint that the property which was subject of the
insurance was owned by Dunn and the property was mortgaged to SMB. 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.
3. Harding answered to the complaint claiming for himself the right to recover the
difference between the plaintiff's mortgage credit and the face value of the policies.
The two insurance companies admitted their liability to SMB, but denied liability to
Harding on the ground that under the contracts of insurance the liability of the
insurance companies was limited to the insurable interest of the plaintiff.
4. The trial court decided that Harding had no right of action whatever against the
companies and absolved them from liability.

ISSUE:
Whether or not the insurance companies are liable to Harding for the balance of the
proceeds of the 2 policies NO

RULING:
No cause of action in Henry Harding against the insurance companies is shown. He
is not a party to the contracts of insurance and cannot directly maintain an
action thereon. His claim is merely of an equitable and subsidiary nature and must
be made effective, if at all, through the San Miguel Brewery in whose name the
contracts are written.

The point is clearly covered by the express provisions of sections 16 and 50 of the
Insurance Act. In the first of the sections, "the measure of an insurable interest in
property is the extent to which the insured might be damnified by loss or injury
thereof"; while in the other it is stated that "the insurance shall be applied exclusively
to the proper interest of the person in whose name it is made unless otherwise
specified in the policy.

In section 19 of the Insurance Act we find it stated that "a change of interest in any
part of a thing insured unaccompanied by a corresponding change of interest in the
insurance, suspends the insurance to an equivalent extent, until the interest in the
thing and the interest in the insurance are vested in the same person." Again in
section 55 it is declared that "the mere transfer of a thing insured does not
transfer the policy, but suspends it until the same person becomes the owner
of both the policy and the thing insured."

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.

5
 GEAGONIA V. CA same interest as that covered by the policy of Country Bankers, no double
GR 114427, February 6, 1995 insurance exists.
The PFIC insurance policies name Geagonia as the insured but contain a
Emergency Recit: Geagonia mortgaged the property in his store with Cebu Tesin mortgage clause which reads: "Loss, if any, shall be payable to Cebu Tesing
Textile. Geagonia then insured the products in his store with Country Bankers for Textiles as their interest may appear subject to the terms of the policy."
P100,000. A fire burned his store and the products so he sought to claim with Country This is a loss payable clause, which means that for the PFIC insurance
Bankers. Country Bankers denied the claim because Condition 3 of the policy states policies, it is the interest of the mortgagee Cebu Tesin Textile that is insured
that Geagonia should inform Country Bankers of any other insurance over the same Unlike the Cebu Bankers insurance policy, where it is the interest of mortgagor
products, and Country Bankers found out that Geagonia had an existing policies over Geagonia, over the value of all the products, that was insured
the same products with PFIC. The Supreme Court ruled that Condition 3 was a
prohibition on double insurance, and in this case, there was no double insurance
because the interests of mortgagors and mortgagees are not the same. The Country
Bankers policy insured Geagonias interest over the products, while the PFIC policies
were policies with a loss-payable clause which means it insures only the interest of
Geagonias mortgagee, Cebu Tesin Textile. As such, there was no violation and
Country Bankers must pay the P100,000 due.

FACTS:
Armando Geagonia owns Norman's Mart which sells RTW clothing
He obtained a P100,000 fire insurance policy from Country Bankers Insurance
Corporation that covered the ready-to-wear clothing (RTW) for sale in the store
Condition 3 of the policy states that:
o the insured (Geagonia) shall give notice to Country Bankers of any
insurance already effected covering the properties
o the failure to do so forfeits the insurance benefits
o however, there is still coverage if the damage is not more than P200,000
On 27 May 1990, fire of accidental origin broke out at the public market of San
Francisco, Agusan del Sur, across Normans Mart, and Geagonia's insured
RTW clothing products were completely destroyed.
Geagonia filed a claim with Country Bankers, but Country Bankers denied the
claim
Country Bankers denied because Geagonia violated Condition 3 of the
policy
o Country Bankers found that at the time of the loss, there was also another
insurance over the insured RTW from Philippines First Insurance Co., Inc.
(PFIC) worth P200,000
o These policies indicate that the insured was Discount Mart, with a mortgage
clause stating that Cebu Tesing Textiles is Geagonias Mortgagee, and loss, if
any, shall be payable to Cebu Tesing Textiles, as their interest may appear

ISSUE: W/N Condition 3s provision on double insurance was violated?

HELD : NO, double insurance is not present in this case. Cebu Bankers must
pay the P100,000 due on the policy.
The SC held that what Condition 3 prohibits is double insurance
A double insurance exists where the same person is insured by several insurers
separately in respect of the same subject and interest.
Since the insurable interests of a mortgagor and a mortgagee on the mortgaged
property are distinct and separate; the two policies of the PFIC do not cover the

6
 SAURA IMPORT AND EXPORT V PHILIPPINE INTERNATIONAL SURETY CO
GR L 15184
May 31, 1963
Mortgagor/Insured: Saura Import and Export Co., Inc. (Saura)
Mortgagee: Philippine National Bank (PNB)
Insurer: Philippine International Surety Co. (PISC)
Actual notice of cancellation in a clear and unequivocal manner, preferably in writing
should be given by the insurer to the insured so that the latter might be given an
opportunity to obtain other insurance for his own protection. The notice should be
personal to the insurer and not to and/or through any unauthorized person by the
policy. Both the PSIC and the PNB failed, wittingly or unwittingly to notify Saura of
the cancellation made.

EMERGENCY RECIT: Saura mortgaged its property to PNB. Saura insured its
mortgaged property to Philippine International Surety Co. from October 2, 1954 to
October 2, 1955. However, on October 15, 1954 Philippine International Surety Co.
cancelled the insurance policy without informing the insured Saura. SC: If a mortgage
or lien exists against the property insured, and the policy contains a clause stating
that loss, if any, shall be payable to such mortgagee or the holder of such lien as his
interest may appear, notice of cancellation to the mortgagee or lienholder alone is
ineffective as a cancellation of the policy as to the owner of the property.
The insurer contends that it gave notice to PNB as mortgagee of the property and that
was already substantial compliance with its duty to notify the insured of the
cancellation of the policy. But notice to the bank, as far as Saura herein is
concerned, is not effective notice. PISC is then ordered to pay Saura Php 29,000,
the amount involved in the policy subject matter of this case.

FACTS:
On Dec. 26, 1952, Saura mortgaged to PNB its registered parcel of land in
Davao to secure the payment of a promissory note amounting to Php
27,000.
A building of strong materials which was also owned by Saura, was erected
on the parcel of land and the building had always been covered by insurance
even before the execution of the mortgage contract.
Pursuant to the mortgage agreement which required Saura to insure the
building and its contents, it obtained a fire insurance for Php 29,000 from
PISC for a period of 1 year starting Oct. 2, 1954 to Oct. 2, 1955.
The mortgage also required Saura to endorse the insurance policy to PNB.
The memo stated: Loss if any, payable to PNG as their interest may appear,
subject to the terms, conditions and warranties of this policy.
The policy was delivered to PNB by Saura.
However on Oct. 15, 1954, barely 13 days after the issuance of the fire
insurance, PISC canceled the same, effective as of the date of issue. Notice
of the cancellation was sent to PNB (but not to Saura) in writing and was
received by the bank on Nov. 8, 1954.
On April 6, 1955, the building and its contents worth Php 4,685 were
burned.
On April 11, 1985, Saura filed a claim with PISC and mortgagee bank.
Upon presentation of notice of loss with PNB, Saura learned for the first time
that the policy had been previously canceled by PISC, when Sauras folder
in the banks file was opened and the notice of the cancellation by PISC was
found.

ISSUE: W/N cancellation by PISC was proper.

HELD: No. SC ordered PISC to pay Saura in the amount of Php 29,000.
RATIO: The policy in question does NOT provide for the notice of cancellation, its
form or period. The Insurance Law does not likewise provide for such notice. This
being the case, it devolves upon the Court to apply the generally accepted principles
of insurance, regarding cancellation of the insurance policy by the insurer.
7
 PNB v. CA
NOTE: no mention of any insurance contract in this case
Emergency recit: Donata Montemayor was the registered owner of several parcels
of land in Pampanga. She executed two mortgages over certain parcels of land in
favor of PNB to secure the loans of Jaramilla, Bacani and her son Salvador. The said
persons failed to pay hence PNB foreclosed on the properties and acquired
ownership thereof through the auction. PNB sold the same lots to the heirs of Donata
and Clodualdo excluding the respondents. Respondents filed an action for
reconveyance arguing that the properties were conjugal and not exclusively owned by
Donata hence the mortgage was null and void. The Court ruled that PNB was a
mortgagee in good faith as it had the right to rely on the face of the title which only
contained the name of Donata, widow.
dispense with the need of inquiring further, except when the party concerned has
actual knowledge of facts and circumstances that would impel a reasonably cautious
man make such inquiry.
The presumption of conjugality under Art. 160 of the Civil Code applies to
property acquired during the lifetime of the husband and wife. In this case, it appears
on the face of the title that the properties were acquired by Donata Montemayor
when she was already a widow. When the property is registered in the name of a
spouse only and there is no showing as to when the property was acquired by said
spouse, this is an indication that the property belongs exclusively to said spouse.

Facts:
1. In 1952, Donata Montemayor mortgaged to PNB several parcels of land
covered by TCT No. 2289 to guarantee the loan granted by the PNB to
Salvador Jaramilla and Pedro Bacani in the amount of P40,900.00
2. In 1963, Donata also mortgaged in favor of PNB certain properties covered
by TCT Nos. 2887 and 2888 to guarantee the payment of the loan account
of her son Salvador Vitug in the amount of P35,200.00.
3. The TCTs were under the name of Donata Montemayor, of legal age,
widow during the mortgages and were free from any liens or
encumbrances.
4. Jaramilla, Bacani and Salvador Vitug failed to pay their loans hence the 30
parcels of land were foreclosed and PNB being the buyer in the auction sale
was able to consolidate titles over the subject properties.
5. PNB subsequently sold the subject properties to the heirs of Clodualdo Vitug
excluding the respondents Maximo and Prudencio.
6. Respondents filed an action for partition and reconveyance of the 30 parcels
of land claiming that the said properties were conjugal properties of
Clodualdo and Donata hence the mortgage and foreclosure in favor of PNB
was null and void. They cited the case of Vitug v. Montemayor which
declared the subject properties as being conjugal in nature.
7. Lower court dismissed the complaint.
8. CA ruled in favor of respondents and held that the mortgage and foreclosure
of of the subject properties was null and void.

Issue: Whether PNB had the right to rely on the face of the TCTs which were in the
name of Donata Montemayor only.

Ruling: YES. When the subject properties were mortgaged to the PNB they were
registered in the name of Donata Montemayor, widow.
In processing the loan applications of Donata Montemayor, the PNB had the
right to rely on what appears in the certificates of title and no more. On its face the
properties are owned by Donata Montemayor, a widow. The PNB had no reason to
doubt nor question the status of said registered owner and her ownership thereof.
Indeed, there are no liens and encumbrances covering the same.
The well-known rule in this jurisdiction is that a person dealing with a
registered land has a right to rely upon the face of the torrens certificate of title and to