Filipinas v Christern G.R. No.

L-2294 May 25, 1951

J. Paras

Facts:
Christern obtained from Filipinas a fire insurance policy of P1000,000, covering merchandise
contained in a building located at Binondo. During the Japanese military occupation, the building and
insured merchandise were burned. The respondent its claim under the policy. The total loss suffered
by the respondent was fixed at P92,650.
The petitioner refused to pay the claim on the ground that the policy in favor of the respondent had
ceased to be in force on the date the U.S. declared war on Germany with the respondent Corporation
being controlled by German subjects and the petitioner being a company under American jurisdiction
(though organized by Philippine laws) when the policy was issued on October 1, 1941. The petitioner,
however, paid to the respondent the sum of P92,650 on April 19, 1943 under orders from the military
government.
The insurer filed for a suit to recover the sum. The contention was that the policy ceased to be effective
because of the outbreak of the war and that the payment made by the petitioner to the respondent
corporation during the Japanese military occupation was under pressure.
The tiral and the appellate courts dismissed the action. The Court of Appeals claimed that a
corporation is a citizen of the country or state by and under the laws of which it was created or
organized.
Hence this appeal.

Issue: Whether the policy in question became null and void upon the declaration of war

Held: Yes. Petition granted.

Ratio:
The majority of the stockholders of the respondent corporation were German subjects. The respondent
became an enemy corporation upon the outbreak of the war. 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 United States in Clark vs. Uebersee Finanz Korporation where the controls test has been
adopted.
Measures of blocking foreign funds, the so called freezing regulations, and other administrative
practice in the treatment of foreign-owned property in the United States allowed to large degree the
determination of enemy interest in domestic corporations and thus the application of the control test.
In Clark vs. Uebersee, the court held that The property of all foreign interest was placed within the
reach of the vesting power (of the Alien Property Custodian) not to appropriate friendly or neutral
assets but to reach enemy interest which masqueraded under those innocent fronts. . . . The power
of seizure and vesting was extended to all property of any foreign country or national so that no
innocent appearing device could become a Trojan horse.
The Philippine Insurance Law states 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.
All individuals therefore, who compose the belligerent powers, exist, as to each other, in a state of
utter exclusion, and are public enemies.
Vance- In the case of an ordinary fire policy, which grants insurance only from year, or for some other
specified term it is plain that when the parties become alien enemies, the contractual tie is broken and
the contractual rights of the parties, so far as not vested, are lost.
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. The premium must be returned
for the sake of justice.
It results that the petitioner is entitled to recover the indemnity paid. However, the petitioner will be
entitled to recover only the equivalent of P92,650 paid on April 19, 1943.
G.R. No. L-15895 November 29, 1920
Lessons Applicable: Perfection (Insurance)

FACTS:
September 24, 1917: Joaquin Herrer made application to the Sun Life Assurance
Company of Canada through its office in Manila for a life annuity
2 days later: he paid P6,000 to the manager of the company's Manila office and was
given a receipt
according to the provisional receipt, 3 things had to be accomplished by the
insurance company before there was a contract:
(1) There had to be a medical examination of the applicant; -check
(2) there had to be approval of the application by the head office of the company;
and - check
(3) this approval had in some way to be communicated by the company to the
applicant - ?
November 26, 1917: The head office at Montreal, Canada gave notice of acceptance
by cable to Manila but this was not mailed
December 4, 1917: policy was issued at Montreal
December 18, 1917: attorney Aurelio A. Torres wrote to the Manila office of the
company stating that Herrer desired to withdraw his application
December 19, 1917: local office replied to Mr. Torres, stating that the policy had
been issued, and called attention to the notification of November 26, 1917
December 21, 1917 morning: received by Mr. Torres
December 20, 1917: Mr. Herrer died
Rafael Enriquez, as administrator of the estate of the late Joaquin Ma. Herrer filed to
recover from Sun Life Assurance Company of Canada through its office in Manila for
a life annuity
RTC: favored Sun Life Insurance
ISSUE: W/N Mr. Herrera received notice of acceptance of his application thereby
perfecting his life annuity

HELD: NO. Judgment is reversed, and the Enriquez shall have and recover from the Sun
Life the sum of P6,000 with legal interest from November 20, 1918, until paid, without
special finding as to costs in either instance. So ordered.

Civil Code
Art. 1319 (formerly Art.1262)
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. The offer must be
certain and the acceptance absolute. A qualified acceptance constitutes a counter-
offer.
Acceptance made by letter or telegram does not bind the offerer except from the
time it came to his knowledge. The contract, in such a case, is presumed to have
been entered into in the place where the offer was made.
not perfected because it has not been proved satisfactorily that the acceptance of
the application ever came to the knowledge of the applicant
GREAT PACIFIC LIFE ASSURANCE COMPANY vs. CA G.R. No. L-
31845 April 30, 1979
FACTS:

Ngo Hing filed an application with the Great Pacific Life Assurance Company for a twenty-year
endownment on the life of his one-year old daughter Helen Go. Respondent supplied the essential
data and paid the premium retaining the agent commission. Binding deposit receipt was issued to
private respondent. He supplied the necessary information to the branch Manager Mondragon.

On April 30 1957, Mondragon received a letter from Pacific life disapproving the insurance for the
reason that the plan applied for is not available for minors below seven years old and offered Juvenile
Triple Action Plan which allegedly was not communicated to Ngo Hing.

On May 28, 1957 Helen Go died of influenza with complication of bronchopneumonia. Thereupon,
private respondent sought the payment of the proceeds of the insurance, but having failed in his effort,
he filed the action for the recovery of the same before the Court of First Instance of Cebu, which
rendered the adverse decision as earlier referred to against both petitioners.

ISSUES
(1) Whether the insurance contract was perfected
(2) Whether private respondent Ngo Hing concealed the state of health and physical condition of Helen
Go, which rendered void the aforesaid receipt

RULING:

(1)
No, the contract of insurance was not perfected.
Based on the conditions printed at the back of the receipt, the binding deposit receipt is intended to
be merely a provisional or temporary insurance contract and only upon compliance of the following
conditions: (1) that the company shall be satisfied that the applicant was insurable on standard rates;
(2) that if the company does not accept the application and offers to issue a policy for a different plan,
the insurance contract shall not be binding until the applicant accepts the policy offered; otherwise,
the deposit shall be refunded; and (3) that if the applicant is not insurable according to the standard
rates, and the company disapproves the application, the insurance applied for shall not be in force at
any time, and the premium paid shall be returned to the applicant.

The binding deposit receipt is merely conditional and is subordinated to the act of the company in
approving or rejecting the application. (Since Ngo Hing failed to fulfill the condition, for the application
to be accepted by the insurer, the contract was not perfected)

Failure of petitioner Mondragon to communicate to respondent, as the respondent alleged, the

rejection of the insurance application would not have any adverse effect on the allegedly perfected
temporary contract. First, there is no perfected contract. In applying for the pla, he is aware, being
agent of the petitioner that the plan being applied for is not available for minors below 7 years old.
Second, being the underwriter and having insurable interest over this daughters life, must have known
and followed the progress on the processing of such application and could not pretend ignorance.

(2)
Private respondent had deliberately concealed the state of health and physical condition of his
daughter Helen Go. He was fully aware that his one-year old daughter is typically a mongoloid child.
Had he communicated said significant fact in the insurance application fom Pacific Life would have
verified the same and would have had no choice but to disapprove the application outright.

The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and
perfect candor or openness and honesty; the absence of any concealment or demotion, however
slight, not for the alone but equally so for the insurer. Whether intentional or unintentional the
concealment entitles the insurer to rescind the contract of insurance.