17. G.R. No.

191849
FELIPE vs MGM MOTOR TRADING, September 23, 2015

FACTS:

Petitioner purchased a car from MGM Motors (MGM). In purchasing such, he

paid a downpayment of Php200,000 and a reservation fee of Php5,000. Then
the succeeding payments we alleged to be paid in checks. After such
purchase, he registered the car, and have it insured by Ayala Insurance
Corporation (AIC).

One day, petitioner parked the car in a street, and the car was lost. He then
tried to claim for the insurance from AIC, but AIC refused to pay because the
former cannot prove insurable interest over the car. Petitioner then went to
MGM to procure the documents so that he can prove his insurable interest.
MGM failed to render the documents alleging that petitioner failed to pay.
MGM claimed that the agreement was to pay in lump sum, not installments.

Moreover, MGM alleged that the checks petitioner paid bounced. Thus, the
matter was brought to court. Upon presentation of evidence, the evidence
presented by petitioner were the receipt of Php200,000 and the testimony of
his father. The evidence proved the payment of such. However, respondents
MGM and AIC filed for demurrer of evidence. It was granted by the judge
because insurable interest was not proved.

ISSUE:

W/N insurable interest was proven.

RULING:

NO. 

Insurable interest was not proven. What was proven was merely the
payment of the Php200,000. Partial payment is not conclusive as to the
proof of insurable interest is concerned. The payment of installment basis
was not even proven in this case. Moreover, it was rebutted that MGM
presented that the sales invoice indicated was on Cash on Delivery (COD). In
effect, the evidence presented by the petitioner has failed to substantiate
the proof of insurable interest. The burden of proof lies on the party alleging
the existence of insurable interest. 

Petitioner failed to overcome such burden.

18. RCBC v. CA - Insurance Proceeds
289 SCRA 292 (1998)

Facts:
>  GOYU applied for credit facilities and accommodations with RCBC. After
due evaluation, a credit facility in the amount of P30 million was initially
granted. Upon GOYU's application increased GOYU's credit facility to P50
million, then to P90 million, and finally to P117 million
>  As security for its credit facilities with RCBC, GOYU executed two REM and
two CM in favor of RCBC, which were registered with the Registry of Deeds
at. Under each of these four mortgage contracts, GOYU committed itself to
insure the mortgaged property with an insurance company approved by
RCBC, and subsequently, to endorse and deliver the insurance policies to
RCBC.
>  GOYU obtained in its name a total of 10 insurance policies from MICO. In
February 1992, Alchester Insurance Agency, Inc., the insurance agent where
GOYU obtained the Malayan insurance policies, issued nine endorsements in
favor of RCBC seemingly upon instructions of GOYU
>  On April 27, 1992, one of GOYU's factory buildings in Valenzuela was
gutted by fire. Consequently, GOYU submitted its claim for indemnity.
>  MICO denied the claim on the ground that the insurance policies were
either attached pursuant to writs of attachments/garnishments issued by
various courts or that the insurance proceeds were also claimed by other
creditors of GOYU alleging better rights to the proceeds than the insured.
>  GOYU filed a complaint for specific performance and damages.  RCBC,
one of GOYU's creditors, also filed with MICO its formal claim over the
proceeds of the insurance policies, but said claims were also denied for the
same reasons that AGCO denied GOYU's claims.
>  However, because the endorsements do not bear the signature of any
officer of GOYU, the trial court, as well as the Court of Appeals, concluded
that the endorsements are defective and held that RCBC has no right over
the insurance proceeds.

Issue:
Whether or not RCBC has a right over the insurance proceeds.

Held:
RCBC has a right over the insurance proceeds.
It is settled that a mortgagor and a mortgagee have separate and distinct
insurable interests in the same mortgaged property, such that each one of
them may insure the same property for his own sole benefit. There is no
question that GOYU could insure the mortgaged property for its own
exclusive benefit. In the present case, although it appears that GOYU
obtained the subject insurance policies naming itself as the sole payee, the
intentions of the parties as shown by their contemporaneous acts, must be
given due consideration in order to better serve the interest of justice and
equity.
It is to be noted that 9 endorsement documents were prepared by Alchester
in favor of RCBC. The Court is in a quandary how Alchester could arrive at
the idea of endorsing any specific insurance policy in favor of any particular
beneficiary or payee other than the insured had not such named payee or
beneficiary been specifically disclosed by the insured itself. It is also
significant that GOYU voluntarily and purposely took the insurance policies
from MICO, a sister company of RCBC, and not just from any other
insurance company. Alchester would not have found out that the subject
pieces of property were mortgaged to RCBC had not such information been
voluntarily disclosed by GOYU itself. Had it not been for GOYU, Alchester
would not have known of GOYU's intention of obtaining insurance coverage
in compliance with its undertaking in the mortgage contracts with RCBC, and
verify, Alchester would not have endorsed the policies to RCBC had it not
been so directed by GOYU.
On equitable principles, particularly on the ground of estoppel, the Court is
constrained to rule in favor of mortgagor RCBC. RCBC, in good faith, relied
upon the endorsement documents sent to it as this was only pursuant to the
stipulation in the mortgage contracts. We find such reliance to be justified
under the circumstances of the case. GOYU failed to seasonably repudiate
the authority of the person or persons who prepared such endorsements.
Over and above this, GOYU continued, in the meantime, to enjoy the
benefits of the credit facilities extended to it by RCBC. After the occurrence
of the loss insured against, it was too late for GOYU to disown the
endorsements for any imagined or contrived lack of authority of Alchester to
prepare and issue said endorsements. If there had not been actually an
implied ratification of said endorsements by virtue of GOYU's inaction in this
case, GOYU is at the very least estopped from assailing their operative
effects.
To permit GOYU to capitalize on its non-confirmation of these endorsements
while it continued to enjoy the benefits of the credit facilities of RCBC which
believed in good faith that there was due endorsement pursuant to their
mortgage contracts, is to countenance grave contravention of public policy,
fair dealing, good faith, and justice. Such an unjust situation, the Court
cannot sanction. Under the peculiar circumstances obtaining in this case, the
Court is bound to recognize RCBC's right to the proceeds of the insurance
policies if not for the actual endorsement of the policies, at least on the basis
of the equitable principle of estoppel.
GOYU cannot seek relief under Section 53 of the Insurance Code which
provides that the proceeds of insurance shall exclusively apply to the
interest of the person in whose name or for whose benefit it is made. The
peculiarity of the circumstances obtaining in the instant case presents a
justification to take exception to the strict application of said provision, it
having been sufficiently established that it was the intention of the parties to
designate RCBC as the party for whose benefit the insurance policies were
taken out. Consider thus the following:
1.       It is undisputed that the insured pieces of property were the subject
of mortgage contracts entered into between RCBC and GOYU in
consideration of and for securing GOYU's credit facilities from RCBC. The
mortgage contracts contained common provisions whereby GOYU, as
mortgagor, undertook to have the mortgaged property properly covered
against any loss by an insurance company acceptable to RCBC.
2.       GOYU voluntarily procured insurance policies to cover the mortgaged
property from MICO, no less than a sister company of RCBC and definitely
an acceptable insurance company to RCBC.
3.       Endorsement documents were prepared by MICO's underwriter,
Alchester Insurance Agency, Inc., and copies thereof were sent to GOYU,
MICO and RCBC. GOYU did not assail, until of late, the validity of said
endorsements.
4.       GOYU continued until the occurrence of the fire, to enjoy the benefits
of the credit facilities extended by RCBC which was conditioned upon the
endorsement of the insurance policies to be taken by GOYU to cover the
mortgaged properties.
This Court cannot over stress the fact that upon receiving its copies of the
endorsement documents prepared by Alchester, GOYU, despite the absence
written conformity thereto, obviously considered said endorsement to be
sufficient compliance with its obligation under the mortgage contracts since
RCBC accordingly continued to extend the benefits of its credit facilities and
GOYU continued to benefit therefrom. Just as plain too is the intention of the
parties to constitute RCBC as the beneficiary of the various insurance
policies obtained by GOYU. The intention of the parties will have to be given
full force and effect in this particular case. The insurance proceeds may,
therefore, be exclusively applied to RCBC, which under the factual
circumstances of the case, is truly the person or entity for whose benefit the
policies were clearly intended.

19. GAISANO CAGAYAN, INC. V. INSURANCE COMPANY OF NORTH

AMERICA, G.R. NO. 147839, [JUNE 8, 2006], 523 PHIL 677-694
FACTS: Intercapitol Marketing Corporation (IMC) is the maker of Wrangler
Blue Jeans. Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of
products bearing trademarks owned by Levi Strauss & Co.. IMC and LSPI
separately obtained from respondent fire insurance policies with book debt
endorsements. The insurance policies provide for coverage on “book debts in
connection with ready-made clothing materials which have been sold or
delivered to various customers and dealers of the Insured anywhere in the
Philippines.” The policies defined book debts as the “unpaid account still
appearing in the Book of Account of the Insured 45 days after the time of
the loss covered under this Policy.” The policies also provide for the following
conditions:
1. Warranted that the Company shall not be liable for any unpaid account in
respect of the merchandise sold and delivered by the Insured which are
outstanding at the date of loss for a period in excess of six (6) months from
the date of the covering invoice or actual delivery of the merchandise
whichever shall first occur.
2. Warranted that the Insured shall submit to the Company within twelve
(12) days after the close of every calendar month all amount shown in their
books of accounts as unpaid and thus become receivable item from their
customers and dealers. . . .
Petitioner is a customer and dealer of the products of IMC and LSPI. On
February 25, 1991, the Gaisano Superstore Complex in Cagayan de Oro City,
owned by petitioner, was consumed by fire. Included in the items lost or
destroyed in the fire were stocks of ready-made clothing materials sold and
delivered by IMC and LSPI.
On February 4, 1992, respondent filed a complaint for damages against
petitioner. It alleges that IMC and LSPI filed with respondent their claims
under their respective fire insurance policies with book debt endorsements;
that as of February 25, 1991, the unpaid accounts of petitioner on the sale
and delivery of ready-made clothing materials with IMC was P2,119,205.00
while with LSPI it was P535,613.00; that respondent paid the claims of IMC
and LSPI and, by virtue thereof, respondent was subrogated to their rights
against petitioner; that respondent made several demands for payment
upon petitioner but these went unheeded.
In its Answer with Counter Claim dated July 4, 1995, petitioner contends
that it could not be held liable because the property covered by the
insurance policies were destroyed due to fortuities event or force majeure;
that respondent’s right of subrogation has no basis inasmuch as there was
no breach of contract committed by it since the loss was due to fire which it
could not prevent or foresee; that IMC and LSPI never communicated to it
that they insured their properties; that it never consented to paying the
claim of the insured.
ISSUE: WON IMC AND LSPI HAVE INSURABLE INTEREST AND WON THE
PETITIONER IS LIABLE TO THE INSURER.
HELD: YES. It is well-settled that when the words of a contract are plain and
readily understood, there is no room for construction. In this case, the
questioned insurance policies provide coverage for “book debts in connection
with ready-made clothing materials which have been sold or delivered to
various customers and dealers of the Insured anywhere in the Philippines.” ;
and defined book debts as the “unpaid account still appearing in the Book of
Account of the Insured 45 days after the time of the loss covered under this
Policy.” Nowhere is it provided in the questioned insurance policies that the
subject of the insurance is the goods sold and delivered to the customers
and dealers of the insured.
Indeed, when the terms of the agreement are clear and explicit that they do
not justify an attempt to read into it any alleged intention of the parties, the
terms are to be understood literally just as they appear on the face of the
contract. Thus, what were insured against were the accounts of IMC and
LSPI with petitioner which remained unpaid 45 days after the loss through
fire, and not the loss or destruction of the goods delivered.
IMC and LSPI did not lose complete interest over the goods. They have an
insurable interest until full payment of the value of the delivered goods.
Unlike the civil law concept of res perit domino, where ownership is the basis
for consideration of who bears the risk of loss, in property insurance, one’s
interest is not determined by concept of title, but whether insured has
substantial economic interest in the property.
Section 13 of our Insurance Code defines insurable interest as “every
interest in 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.” Parenthetically, under Section 14 of the same
Code, an insurable interest in property may consist in: (a) an existing
interest; (b) an inchoate interest founded on existing interest; or (c) an
expectancy, coupled with an existing interest in that out of which the
expectancy arises.
Therefore, an insurable interest in property does not necessarily imply a
property interest in, or a lien upon, or possession of, the subject matter of
the insurance, and neither the title nor a beneficial interest is requisite to the
existence of such an interest, it is sufficient that the insured is so situated
with reference to the property that he would be liable to loss should it be
injured or destroyed by the peril against which it is insured. Anyone has an
insurable interest in property who derives a benefit from its existence or
would suffer loss from its destruction. Indeed, a vendor or seller retains an
insurable interest in the property sold so long as he has any interest therein,
in other words, so long as he would suffer by its destruction, as where he
has a vendor’s lien. In this case, the insurable interest of IMC and LSPI
pertain to the unpaid accounts appearing in their Books of Account 45 days
after the time of the loss covered by the policies.
Under Article 1263 of the Civil Code, “[i]n an obligation to deliver a generic
thing, the loss or destruction of anything of the same kind does not
extinguish the obligation.” If the obligation is generic in the sense that the
object thereof is designated merely by its class or genus without any
particular designation or physical segregation from all others of the same
class, the loss or destruction of anything of the same kind even without the
debtor’s fault and before he has incurred in delay will not have the effect of
extinguishing the obligation. This rule is based on the principle that the
genus of a thing can never perish. Genus nunquan perit. An obligation to pay
money is generic; therefore, it is not excused by fortuitous loss of any
specific property of the debtor.
Thus, whether fire is a fortuitous event or petitioner was negligent are
matters immaterial to this case. What is relevant here is whether it has been
established that petitioner has outstanding accounts with IMC and LSPI.
With respect to IMC, the respondent has adequately established its claim.
Exhibits “C” to “C-22” show that petitioner has an outstanding account with
IMC in the amount of P2,119,205.00. Exhibit “E” is the check voucher
evidencing payment to IMC. Exhibit “F” is the subrogation receipt executed
by IMC in favor of respondent upon receipt of the insurance proceeds. All
these documents have been properly identified, presented and marked as
exhibits in court. The subrogation receipt, by itself, is sufficient to establish
not only the relationship of respondent as insurer and IMC as the insured,
but also the amount paid to settle the insurance claim. The right of
subrogation accrues simply upon payment by the insurance company of the
insurance claim. Respondent’s action against petitioner is squarely
sanctioned by Article 2207 of the Civil Code which provides:
Art. 2207. If the plaintiff’s property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of
the wrong or breach of contract complained of, the insurance company shall
be subrogated to the rights of the insured against the wrongdoer or the
person who has violated the contract. . . .
Petitioner failed to refute respondent’s evidence.

Case No. 20
HEIRS OF LORETO C. MARAMAG, represented by surviving spouse
VICENTA  PANGILINAN MARAMAG, Petitioners,
vs.
EVA VERNA DE GUZMAN MARAMAG, ODESSA DE GUZMAN MARAMAG,
KARL BRIAN DE GUZMAN MARAMAG, TRISHA ANGELIE MARAMAG, THE
INSULAR LIFE ASSURANCE COMPANY, LTD., and GREAT PACIFIC LIFE
ASSURANCE CORPORATION, Respondents.
G.R. No. 181132, June 5, 2009

FACTS:
Petitioners in this case are the legitimate heirs of deceased Loreto. The
petitioners were not named as beneficiaries in the insurance policies issued
by Insular and Grepalife.  Petitioners claim that Eva, the concubine of Loreto
and a suspect in his murder, is disqualified from being designated of the
insurance policies. They further add that Eva’s children with Loreto, being
illegitimate children, are entitled to a lesser share of the proceeds of the
policies. Thus, they prayed that the share of Eva and portions of the share of
Loreto’s illegitimate children should be awarded to them, being the
legitimate heirs of Loreto entitled to their respective legitimes.
ISSUE: 
Whether or not the proceeds should be awarded to the petitioners
HELD: 
  No. The insurance contracts are governed by specials laws. Petitioners
are third parties to the insurance contracts with Insular and Grepalife and
thus, they are not entitled to the proceeds thereof. The Insular and Grepalife
have no legal obligation to turn over the insurance proceeds to the
petitioner. It is only in cases where the insured has not designated any
beneficiary, or when the designated beneficiary is disqualified by law to
receive the proceeds, that the insurance policy proceeds shall redound to the
benefit of the estate of the insured.
 

Case No. 21
VIOLETA R. LALICAN, Petitioner,
vs.
THE INSULAR LIFE ASSURANCE COMPANY LIMITED, AS REPRESENTED
BY THE PRESIDENT VICENTE R. AVILON, Respondent.
G.R. No. 183526, August 25, 2009

FACTS:
Violeta is the widow of the deceased Eulogio C. Lalican (Eulogio).
During his lifetime, Eulogio applied for an insurance policy with Insular Life.
On 24 April 1997, Insular Life, through Josephine Malaluan (Malaluan), its
agent in Gapan City, issued in favor of Eulogio Policy No. 9011992, which
contained a 20-Year Endowment Variable Income Package Flexi Plan worth
P500,000.00, with two riders valued at P 500,000.00 each. Thus, the value
of the policy amounted to P1,500,000.00. Violeta was named as the primary
beneficiary. P Under the terms of Policy No. 9011992, Eulogio was to pay the
premiums on a quarterly basis in the amount of 8,062.00, payable every 24
April, 24 July, 24 October and 24 January of each year, until the end of the
20-year period of the policy. According to the Policy Contract, there was a
grace period of 31 days for the payment of each premium subsequent to the
first. If any premium was not paid on or before the due date, the policy
would be in default, and if the premium remained unpaid until the end of the
grace period, the policy would automatically lapse and become void.  Eulogio
paid the premiums due on 24 July 1997 and 24 October 1997. However, he
failed to pay the premium due on 24 January 1998, even after the lapse of
the grace period of 31 days. Policy No. 9011992, therefore, lapsed and
became void. Eulogio submitted to the Cabanatuan District Office of Insular
Life, through Malaluan, on 26 May 1998, an Application for Reinstatement of
Policy No. 9011992, together with the amount of P 8,062.00 to pay for the
premium due on 24 January 1998. In a letter dated 17 July 1998, Insular
Life notified Eulogio that his Application for Reinstatement could not be fully
processed because, although he already deposited P8,062.00 as payment for
the 24 January 1998 premium, he left unpaid the overdue interest thereon
amounting to P322.48. Thus, Insular Life instructed Eulogio to pay the
amount of interest and to file another application for reinstatement. Eulogio
was likewise advised by Malaluan to pay the premiums that subsequently
became due on 24 April 1998 and 24 July 1998, plus interest. On 17
September 1998, Eulogio went to Malaluans house and submitted a second
Application for Reinstatement of Policy No. 9011992, including the amount of
P17,500.00, representing payments for the overdue interest on the premium
for 24 January 1998, and the premiums which became due on 24 April 1998
and 24 July 1998. As Malaluan was away on a business errand, her husband
received Eulogios second Application for Reinstatement and issued a receipt
for the amount Eulogio deposited.  A while later, on the same day, 17
September 1998, Eulogio died of cardio-respiratory arrest secondary to
electrocution.
ISSUES: 
Whether or not Eulogio had an existing insurable interest in his own
life until the day of his death in order to have the insurance policy validly
reinstated.
HELD: 
  No. An insurable interest is one of the most basic and essential
requirements in an insurance contract. In general, an insurable interest is
that interest which a person is deemed to have in the subject matter
insured, where he has a relation or connection with or concern in it, such
that the person will derive pecuniary benefit or advantage from the
preservation of the subject matter insured and will suffer pecuniary loss or
damage from its destruction, termination, or injury by the happening of the
event insured against. The existence of an insurable interest gives a person
the legal right to insure the subject matter of the policy of insurance. Section
10 of the Insurance Code indeed provides that every person has an insurable
interest in his own life. Section 19 of the same code also states that an
interest in the life or health of a person insured must exist when the
insurance takes effect, but need not exist thereafter or when the loss occurs.
In the instant case, Eulogios death rendered impossible full compliance with
the conditions for reinstatement of Policy No. 9011992. True, Eulogio, before
his death, managed to file his Application for Reinstatement and deposit the
amount for payment of his overdue premiums and interests thereon with
Malaluan; but Policy No. 9011992 could only be considered reinstated after
the Application for Reinstatement had been processed and approved by
Insular Life during Eulogios lifetime and good health.
The stipulation in a life insurance policy giving the insured the privilege to
reinstate it upon written application does not give the insured absolute right
to such reinstatement by the mere filing of an application. The insurer has
the right to deny the reinstatement if it is not satisfied as to the insurability
of the insured and if the latter does not pay all overdue premium and all
other indebtedness to the insurer. After the death of the insured the
insurance Company cannot be compelled to entertain an application for
reinstatement of the policy because the conditions precedent to
reinstatement can no longer be determined and satisfied.
Malaluan did not have the authority to approve Eulogios Application for
Reinstatement. Malaluan still had to turn over to Insular Life Eulogios
Application for Reinstatement and accompanying deposits, for processing
and approval by the latter.
Violeta did not adduce any evidence that Eulogio might have failed to fully
understand the import and meaning of the provisions of his Policy Contract
and/or Application for Reinstatement, both of which he voluntarily signed.
While it is a cardinal principle of insurance law that a policy or contract of
insurance is to be construed liberally in favor of the insured and strictly as
against the insurer company, yet, contracts of insurance, like other
contracts, are to be construed according to the sense and meaning of the
terms, which the parties themselves have used. If such terms are clear and
unambiguous, they must be taken and understood in their plain, ordinary
and popular sense.
Case No. 22
VICENTE ONG LIM SING, JR., petitioner,
vs.
FEB LEASING & FINANCE CORPORATION, respondent.
G.R. No. 168115, June 8, 2007

FACTS:
On March 9, 1995, FEB Leasing and Finance Corporation (FEB) entered
into a lease of equipment and motor vehicles with JVL Food Products (JVL).
On the same date, Vicente Ong Lim Sing, Jr. (Lim) executed an Individual
Guaranty Agreement with FEB to guarantee the prompt and faithful
performance of the terms and conditions of the aforesaid lease agreement.
Corresponding Lease Schedules with Delivery and Acceptance Certificates
over the equipment and motor vehicles formed part of the agreement. Under
the contract, JVL was obliged to pay FEB an aggregate gross monthly rental
of One Hundred Seventy Thousand Four Hundred Ninety-Four Pesos (P
170,494.00).  JVL defaulted in the payment of the monthly rentals. As of
July 31, 2000, the amount in arrears, including penalty charges and
insurance premiums, amounted to Three Million Four Hundred Fourteen
Thousand Four Hundred Sixty Eight and 75/100 Pesos (P3,414,468.75). On
August 23, 2000, FEB sent a letter to JVL demanding payment of the said
amount. However, JVL failed to pay.
ISSUES: 
Whether or not JVL as the lessee have an insurable interest over the
leased items.
HELD: 
  Yes. The stipulation in Section 14 of the lease contract, that the
equipment shall be insured at the cost and expense of the lessee against
loss, damage, or destruction from fire, theft, accident, or other insurable risk
for the full term of the lease, is a binding and valid stipulation. Petitioner, as
a lessee, has an insurable interest in the equipment and motor vehicles
leased. Section 17 of the Insurance Code provides that the measure of an
insurable interest in property is the extent to which the insured might be
damnified by loss or injury thereof. It cannot be denied that JVL will be
directly damnified in case of loss, damage, or destruction of any of the
properties leased.

It has also been held that the test of insurable interest in property is
whether the assured has a right, title or interest therein that he will be
benefited by its preservation and continued existence or suffer a direct
pecuniary loss from its destruction or injury by the peril insured against.