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In February 1981, the spouses Go It Bun and Choi Ping Tai insured their property with Cathay Insurance Co., Inc. and Equitable-Insurance Corporation. The period of insurance was from March 29, 1981 to March 29, 1982.
The said insured property was burned down on March 19, 1982. Choi Ping Tai then filed an insurance claim. After investigation, both insurance companies denied the insurance claim. The insurers found out that Choi Ping Tai and her husband no longer have an insurable interest over the said property because of the following reasons:
1. It appears that on March 18, 1981, the said property was already registered in the name of a certain Tan Hua.
2. On February 24, 1982, the property was foreclosed by Equitable Bank – it appears that the spouses mortgaged the property in 1979 with the said bank.
In short, the spouses were no longer the owners of the said property when it burned down, hence, they cannot collect insurance claims thereon.
However, the spouses argue that from February 24, 1982 – the date of registration of Equitable Bank’s right over the foreclosed property with the Register of Deeds – they still have the right of redemption which is one year therefrom or until February 24, 1983. The spouses insist that Tan Hua’s ownership is not complete because they can still exercise the right of redemption which gives them the right to collect insurance benefits. Judge Baltazar Dizon ruled in favor of the insurers when the issue was brought in court.
ISSUE: Whether or not the spouses are correct.
HELD: No. Their right of redemption has already expired. The Supreme Court reviewed the records of the case and found out that the certificate of sale was issued in favor of Tan Hua on March 18, 1981. The Supreme Court ruled that this date is the reckoning point as to when the spouses’ right of redemption and its prescriptive period should be counted (prior date). Therefore, the spouses only had until March 18, 1982 to exercise their right of redemption which they failed to do. So when the property was gutted by fire on March 19, 1982, the spouses were no longer the owners thereof; they no longer have insurable interest thereon.