Scribd Logo
Upload

Welcome to Scribd!

  • 59 views

    SPOUSES NILO CHA and STELLA UY CHA, and UNITED INSURANCE CO., INC. v. COURT OF APPEALS and CKS DEVELOPMENT CORPORATION

    Uploaded by

    Lance Bernadette Basa
    The Cha spouses leased premises from CKS Development Corporation and insured their merchandise inside against fire damage for $500,000 without CKS's consent. After a fire, CKS demanded the insurance payout, citing the lease agreement. The Supreme Court ruled against CKS, finding that as lessor, CKS had no insurable interest in the tenants' merchandise per the Insurance Code. The automatic assignment clause in the lease purporting to transfer insurance payouts to CKS was void as contrary to law and public policy. The proceeds rightfully belonged to the Cha spouses as the insured parties.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    SPOUSES NILO CHA and STELLA UY CHA, and UNITED INSURANCE CO., INC. v. COURT OF APPEALS and CKS DEVELOPMENT CORPORATION

    Uploaded by

    Lance Bernadette Basa
    59 views2 pages
    The Cha spouses leased premises from CKS Development Corporation and insured their merchandise inside against fire damage for $500,000 without CKS's consent. After a fire, CKS demanded the insurance payout, citing the lease agreement. The Supreme Court ruled against CKS, finding that as lessor, CKS had no insurable interest in the tenants' merchandise per the Insurance Code. The automatic assignment clause in the lease purporting to transfer insurance payouts to CKS was void as contrary to law and public policy. The proceeds rightfully belonged to the Cha spouses as the insured parties.

    Original Description:

    Original Title

    14. SPOUSES NILO CHA and STELLA UY CHA, and UNITED INSURANCE CO., INC. v. COURT OF APPEALS and CKS DEVELOPMENT CORPORATION

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Cha spouses leased premises from CKS Development Corporation and insured their merchandise inside against fire damage for $500,000 without CKS's consent. After a fire, CKS demanded the insurance payout, citing the lease agreement. The Supreme Court ruled against CKS, finding that as lessor, CKS had no insurable interest in the tenants' merchandise per the Insurance Code. The automatic assignment clause in the lease purporting to transfer insurance payouts to CKS was void as contrary to law and public policy. The proceeds rightfully belonged to the Cha spouses as the insured parties.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    59 views2 pages

    SPOUSES NILO CHA and STELLA UY CHA, and UNITED INSURANCE CO., INC. v. COURT OF APPEALS and CKS DEVELOPMENT CORPORATION

    Uploaded by

    Lance Bernadette Basa
    The Cha spouses leased premises from CKS Development Corporation and insured their merchandise inside against fire damage for $500,000 without CKS's consent. After a fire, CKS demanded the insurance payout, citing the lease agreement. The Supreme Court ruled against CKS, finding that as lessor, CKS had no insurable interest in the tenants' merchandise per the Insurance Code. The automatic assignment clause in the lease purporting to transfer insurance payouts to CKS was void as contrary to law and public policy. The proceeds rightfully belonged to the Cha spouses as the insured parties.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    14. SPOUSES NILO CHA and STELLA UY CHA, and UNITED INSURANCE CO., INC. v.

    COURT OF
    APPEALS and CKS DEVELOPMENT CORPORATION
    G.R. No. 124520. August 18, 1997.
    PADILLA, J:

    FACTS:
    Petitioner-spouses Cha, as lessees, entered into a lease contract with private respondent CKS
    Development Corporation (hereinafter CKS), as lessor. In their contract of lease, it was stated that

    "18. . . . The LESSEE shall not insure against fire the chattels, merchandise, textiles, goods
    and effects placed at any stall or store or space in the leased premises without first obtaining
    the written consent and approval of the LESSOR. If the LESSEE obtain(s) the insurance
    thereof without the consent of the LESSOR then the policy is deemed assigned and transferred
    to the LESSOR for its own benefit; . . ."

    Notwithstanding such, the Cha spouses insured against loss by fire their merchandise inside the
    leased premises for P500,000.00 with the United Insurance Co., Inc. (United) without the written consent
    of private respondent CKS. Fire broke out inside the leased premises. When CKS learned of the insurance
    earlier procured by the Cha spouses, it wrote the insurer (United) a demand letter asking that the proceeds
    of the insurance contract to be paid directly to CKS, based on its lease contract with the Cha spouses.
    United refused to pay CKS. Hence, the latter filed a complaint against the Cha spouses and United.

    ARGUMENT OF THE PETITIONER: Nothing stated in the case.

    ARGUMENT OF THE RESPONDENT: Nothing stated in the case.

    DECISION OF THE RTC: RTC ordered United to pay CKS the amount of P335,063.11 and defendant Cha
    spouses to pay P50,000.00 as exemplary damages, P20,000.00 as attorney's fees and costs of suit.

    DECISION OF THE CA: CA affirmed the decision of the trial court, deleting however the awards for
    exemplary damages and attorney's fees.

    ISSUE: WHETHER OR NOT CKS CAN DEMAND THE PROCEEDS OF THE INSURANCE CONTRACT
    BECAUSE OF PARAGRAPH 18 OF THE LEASE CONTRACT. (Whether or not the aforequoted
    paragraph 18 of the lease contract entered into between CKS and the Cha Spouses is valid insofar as it
    provides that any fire insurance policy obtained by the lessee (Cha Spouses) over their merchandise inside
    the leased premises is deemed assigned or transferred to the lessor (CKS) if said policy is obtained without
    the prior written consent of the latter.

    RULING: NO.

    Sec. 18 of the Insurance Code provides:

    "Sec. 18. No contract or policy of insurance on property shall be enforceable except for the
    benefit of some person having an insurable interest in the property insured."

    A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over their
    merchandise is primarily a contract of indemnity. Insurable interest in the property insured must exist at the
    time the insurance takes effect and at the time the loss occurs. The basis of such requirement of insurable
    interest in property insured is based on sound public policy: to prevent a person from taking out an insurance
    policy on property upon which he has no insurable interest and collecting the proceeds of said policy in
    case of loss of the property. In such a case, the contract of insurance is a mere wager which is void under
    Section 25 of the Insurance Code, which provides:
    "Section 25. Every stipulation in a policy of Insurance for the payment of loss whether the person
    insured has or has not any interest in the property insured, or that the policy shall be received
    as proof of such interest, and every policy executed by way of gaming or wagering, is void."
    In the present case, it cannot be denied that CKS has no insurable interest in the goods and
    merchandise inside the leased premises under the provisions of Section 17 of the Insurance Code which
    provide:

    "Section 17. The measure of an insurable interest in property is the extent to which the insured
    might be damnified by loss of injury thereof."

    CKS cannot be validly a beneficiary of the fire insurance policy taken by the petitioner-spouses over
    their merchandise. This insurable interest over said merchandise remains with the insured, the Cha
    spouses. The automatic assignment of the policy to CKS under the provision of the lease contract
    previously quoted is void for being contrary to law and/or public policy. The proceeds of the fire insurance
    policy thus rightfully belong to the spouses Nilo Cha and Stella Uy-Cha (herein co-petitioners). The insurer
    (United) cannot be compelled to pay the proceeds of the fire insurance policy to a person (CKS) who has
    no insurable interest in the property insured.

    Notes:
    Non-life insurance policy
    • Primarily a contract of indemnity.
    • Fire insurance policy.

    Insurable interest in the property insured must exist at the time the insurance takes effect and at the
    time the loss occurs.

    The basis of requirement of insurable interest in property insured is sound public policy. It is to prevent a
    person from taking out an insurance policy on property upon which he has no insurable interest and
    collecting the proceeds of said policy in case of loss of the property.

    You might also like