FILIPINAS DE COMPANIA DE SEGUROS vs.

CHRISTERN, HUENFELD & CO

G.R. No. L-2294 May 25, 1951, EN BANC (PARAS, C.J.)

FACTS:

Christern, Huenefeld and Company, a German company, obtained a fire insurance

policy from Filipinas Compaia for the merchandise contained in a building located
in Binondo, Manila in the sum of P100,000. Filipinas Compaia is an American
controlled company. The building and the insured merchandise were burned during
the Japanese occupation. Christern filed its claim amounting to P92,650.00 but
Filipinas Compaia refused to pay alleging that Christern is a corporation whose
majority stockholders are Germans and that during the Japanese occupation,
America declared war against Germany hence the insurance policy ceased to be
effective because the insured has become an enemy. Filipinas Compaia was
eventually ordered to pay Christern as ordered by the Japanese government.

ISSUE:

Whether or not Christern, Huenefeld and Co is entitled to receive the proceeds from
the insurance claim.

HELD:

NO. There is no question that majority of the stockholders of Christern were

German subjects. This being so, Christern became an enemy corporation upon the
outbreak of the war between the United States and Germany. 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.

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 had ceased
to be valid and enforceable, 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. 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
Insurance Case Digest: Great Pacific Life Assurance Corp. v. CA (1999)
Lessons Applicable:
Credit in Life and Health Insurance (Insurance)
Mortgagor (Insurance)
Laws Applicable: Sec. 8 of Insurance Code
FACTS:
A contract of group life insurance was executed between Great Pacific Life
Assurance Corporation Grepalife) and Development Bank of the Philippines
(DBP)
o Grepalife agreed to insure the lives of eligible housing loan
mortgagors of DBP
November 11, 1983: Dr. Wilfredo Leuterio, a physician and a housing
debtor of DBP applied for membership in the group life insurance plan
o Dr. Leuterio answered questions concerning his health condition
as follows:
7. Have you ever had, or consulted, a physician for a heart
condition, high blood pressure, cancer, diabetes, lung, kidney or
stomach disorder or any other physical impairment?
Answer: No. If so give details ___________.
8. Are you now, to the best of your knowledge, in good health?
Answer: [ x ] Yes [ ] No.[4]
November 15, 1983: Grepalife issued Certificate No. B-18558, as insurance
coverage of Dr. Leuterio, to the extent of his DBP mortgage indebtedness
amounting to P86,200
August 6, 1984: Dr. Leuterio died due to massive cerebral hemorrhage.
o DBP submitted a death claim to Grepalife
Grepalife denied the claim alleging that Dr. Leuterio was
not physically healthy when he applied
RTC: Favored Medarda V. Leuterio (widow) and held Grepalife (insurer)
liable to pay DBP (creditor of the insured Dr. Wilfredo Leuterio)
CA sustained
ISSUE:
1. W/N DBP has insurable interest as creditor - YES
2. W/N Grepalife should be held liable - YES
HELD:
1. YES
In this type of policy insurance, the mortgagee is simply an appointee of
the insurance fund, such loss-payable clause does not make the mortgagee
a party to the contract
Section 8 of the Insurance Code provides:
Unless the policy provides, where a mortgagor of property effects insurance in his
own name providing that the loss shall be payable to the mortgagee, or assigns a
policy of insurance to a mortgagee, the insurance is deemed to be upon the interest
of the mortgagor, who does not cease to be a party to the original contract, and any
act of his, prior to the loss, which would otherwise avoid the insurance, will have
the same effect, although the property is in the hands of the mortgagee, but any act
which, under the contract of insurance, is to be performed by the mortgagor, may
be performed by the mortgagee therein named, with the same effect as if it had Hence, it cannot collect the insurance proceeds, after it already
been performed by the mortgagor. foreclosed on the mortgage

The insured Dr. Wilfredo Leuterio did not cede to the mortgagee all his
rights or interests in the insurance. When Grepalife denied payment, DBP
collected the debt from the mortgagor and took the necessary action of
foreclosure on the residential lot of Dr. Wilfredo Leuterio

Insured may be regarded as the real party in interest, although he has

assigned the policy for the purpose of collection, or has assigned as
collateral security any judgment he may obtain

2. YES

medical findings were not conclusive because Dr. Mejia did not conduct an
autopsy

widow who was not even sure if the medicines taken by Dr. Leuterio were
for hypertension

Grepalife failed to establish that there was concealment made by the

insured, hence, it cannot refuse payment of the claim

fraudulent intent on the part of the insured must be established to entitle

the insurer to rescind the contract. Misrepresentation as a defense of the
insurer to avoid liability is an affirmative defense and the duty to establish
such defense by satisfactory and convincing evidence rests upon the
insurer

The policy states that upon receipt of due proof of the Debtors death
during the terms of this insurance, a death benefit in the amount of
P86,200.00 shall be paid. In the event of the debtors death before his
indebtedness with the creditor shall have been fully paid, an amount to pay
the outstanding indebtedness shall first be paid to the Creditor and the
balance of the Sum Assured, if there is any shall then be paid to the
beneficiary/ies designated by the debtor.

DBP foreclosed in 1995 their residential lot, in satisfaction of mortgagors

outstanding loan

o insurance proceeds shall inure to the benefit of the heirs of the

deceased person or his beneficiaries

o Equity dictates that DBP should not unjustly enrich itself at the
expense of another (Nemo cum alterius detrimenio protest).
Philam v Pineda G.R. No. L-54216 July 19, 1989
J. Paras
Facts:
Pineda procured an ordinary life insurance policy from the petitioner company and
designated his wife and children as irrevocable beneficiaries.
He then filed a petition to amend the designation of the beneficiaries in his life
policy from irrevocable to revocable.
The judge granted the request.
Petitioner promptly filed a motion but was denied. Hence, this petition.
Issues:
1. WON the designation of the irrevocable beneficiaries could be changed or
amended without the consent of all the irrevocable beneficiaries.
2. WON the irrevocable minor beneficiaries could give consent to the change in
designation
Held: No to both. Petition dismissed.
Ratio:
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.
There was an express stipulation to this effect: It is hereby understood and agreed
that, notwithstanding the provisions of this policy to the contrary, inasmuch as the
designation of the primary/contingent beneficiary/beneficiaries in this Policy has
been made without reserving the right to change said beneficiary/ beneficiaries,
such designation may not be surrendered to the Company, released or assigned;
and no right or privilege under the Policy may be exercised, or agreement made
with the Company to any change in or amendment to the Policy, without the
consent of the said beneficiary/beneficiaries.
The alleged acquiescence of the six (6) children beneficiaries of the policy cannot be
considered an effective ratification due to the fact that they were minors. Neither
could they act through their father insured since their interests are quite divergent
from one another.
Therefore, the parent-insured cannot exercise rights and/or privileges pertaining to
the insurance contract, for otherwise, the vested rights of the irrevocable
beneficiaries would be rendered inconsequential.
Of equal importance is the well-settled rule that the contract between the parties is
the law binding on both of them and for so many times, this court has consistently
issued pronouncements upholding the validity and effectivity of contracts. Likewise,
contracts which are the private laws of the contracting parties should be fulfilled
according to the literal sense of their stipulations, for contracts are obligatory, no
matter in what form they may be, whenever the essential requisites for their validity
are present
The change in the designation of was not within the contemplation of the parties.
The lower court instead made a new contract for them. It acted in excess of its
authority when it did so.