RCBC V. C.A GR NO. 128833.

APRIL 20, 1998

FACTS:
When GOYU & Sons, Inc. (GOYU) obtained a credit facility from Rizal Com
mercial BankingCorporaon (RCBC) it executed a mortgage contract in
f a v o r o f t h e b a n k w h e r e i n i t w a s e x p r e s s l y stipulated that GOYU will insure all the
subject properties with an insurance company approved by the bank and to endorse and
deliver the policies to the
bank.G O Y U , t h r o u g h A l c h e s t e r I n s u r a n c e , A g e n c y , I n c . , t o o k i n s u r a n c e p o l i
c i e s f r o m M a l a y a n Insurance Company, Inc. (MICO), sister company of RCBC, and endorsed
them in favor of RCBC. Copies of the endorsements were sent and received by GOYU, RCBC and
MICO.GOYU continued to enjoy the benefits of the credit facilities extended to it by the bank.
When GOYU's factory buildings were gutted by fire, GOYU and RCBC filed separate
claims with MICO but were both denied because the policies were either attached or claimed
by other creditors. GOYU then led a complaint for specificc performance and damages
disowning the endorsements or lack of authority of Alchester to prepare and issue said
endorsements in favor of RCBC. The trial court rendered judgment
ordering, among others, MICO to pay re loss claim of GOYU while ordering MICO
and RCBC to pay damages. GOYU was ordered to pay its loan obligations with RCBC with
interests. On appeal, the Court of Appeals sustained the findings of the trial court
with respect to MICO and RCBC's liabilities. Hence, this recourse.
ISSUE:
Whether or not RCBC, as mortgagee, has any right over the insurance
p o l i c i e s t a k e n b y G O Y U , t h e mortgagor, in case of the occurrence of loss?
HELD: YES
The Supreme Court held that a mortgagor and a mortgagee have separate and distinct
insurable interests in the mortgaged property and may insure the same for his own
sole benefit; that GOYU is estopped from assailing the validity of the endorsements
in favor of RCBC after it had voluntarily and purposely took the insurance policies from a
sister company of RCBC and failed to seasonably repudiate the authority of the persons who
prepared the endorsements; that to permit GOYU to capitalize on its non-confirmation of
the endorsements is to countenance grave contravention of public policy, fair
dealing, good faith and justice; that generally, the proceeds of an insurance shall exclusively
apply to the interest of the person in whose name or for whose benefit it is made except when
otherwise intended by the parties; and that insurance policies transferred by way of
endorsement to a mortgagee can no longer be attached by other creditors.