[1] Fil Cia de Seguros v. Chistern, Huenefeld & Co.
is a corporation organized under and by virtue of the laws of the
GR No. L-2294 | May 25, 1951 | Parties – Who may be insured| Kathleen
Petitioner: FILIPINAS COMPAÑÍA DE SEGUROS
Respondents: CHRISTERN, HUENEFELD & Co., INC.,
Recit-Ready: Petitioner Filipinas is a company under American jurisdiction.
Respondent Christern is a corporation organized under Philippine laws but majority
of its stockholders are German subjects.
On Oct. 1, 1941, respondent obtained a fire insurance policy from petitioner
covering its merchandise. On Dec. 10, 1941, there was a declaration of war
between US & Germany. On Feb 27, 1942 (and during Japanese occupation), the
building and insured merchandise were burned. Respondent claimed from
petitioner the amount of loss. Petitioner paid by order of the Dir. Of the Bureau of
Financing (who was just ordered by the Japanese Military Administration).
In 1946, petitioner now wants to recover the amount it paid alleging that the
insurance policy had ceased to be effective at the time the merchandise were
burned.
W/N the insurance policy continued to be valid despite the war – NO, became null
and void upon the declaration of the war between US & Germany.
The SC ordered the return of the amounts paid by petitioner, less the premiums
paid by respondent beginning Dec. 11, 1941.
Doctrine: 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.
Application: 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.
FACTS:
1. Petitioner, Filipinas Cía. de Seguros, is company under American
jurisdiction. The respondent corporation, Christern, Huenefeld & Co., Inc.
Philippines but is being controlled by German subjects.
2. On October 1, 1941, respondent corporation, after payment of
corresponding premium, obtained from the petitioner, a fire policy in the
sum of P100,000. It covered the merchandise contained in the building
located at Binondo, Manila.
3. On December 10, 1941, war was declared between US & Germany.
4. On February 27, 1942, or during the Japanese military occupation, the
building and insured merchandise were burned.
5. The salvaged goods were sold at public auction and, after deducting
their value, the total loss suffered by the respondent was fixed at
P92,650.
6. The petitioner, in pursuance of the order of the Director of the Bureau of
Financing, Philippine Executive Commission paid to the respondent the
sum of P92,650.
7. In 1946, petitioner filed an action to recover the amount paid alleging
that:
a. the insured merchandise were burned after the policy issued in
1941 in favor of the respondent corporation had ceased to be
effective because of the outbreak of the war and
b. that the payment made by the petitioner to the respondent
corporation during the Japanese military occupation was under
pressure.
8. CFI dismissed the complaint. CA affirmed.
ISSUE: W/N the insurance policy continued to be valid despite the war – NO,
became null and void upon the declaration of the war between US & Germany.
RATIO: 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. There is no question that majority of the stockholders
of the respondent corporation were German subjects. This being so, we have to
rule that said respondent became an enemy corporation upon the outbreak of the
war between the United States and Germany. The English and American cases
relied upon by the Court of Appeals have lost their force in view of the latest
decision of the Supreme Court of the US in Clark vs. Uebersee Finanz
Korporation, decided on December 8, 1947, in which the control test has been
adopted.

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 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.