Commercial Law

Filipinas Compañia de Seguros vs Christern, Huenefeld and Co., Inc.

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G.R. No. L-2294 – 89 Phil. 54 – Mercantile Law – Law on Insurance – Parties to an Insurance Contract – Insured Enemy

In October 1941, Christern, Huenefeld, and Company, a German company, obtained an insurance policy from Filipinas Compañia for the former’s merchandise contained in a building located in Binondo, Manila. Filipinas Compañia is an American controlled company. During the Japanese occupation, the building housing the insured merchandise was burned down. Christern filed its claim amounting to P92,650.00 but Filipinas Compañia refused to pay alleging that Christern is a corporation whose majority stockholders are Germans; 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 Compañia 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. Christern should return the amount it was earlier paid.

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