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San Miguel Vs Law Union and Rock Insurance Co

San Miguel insured property as the mortgagee after the owner Dunn requested the brewery company to procure insurance. Dunn then sold the property to Harding without assigning the insurance. The property was later destroyed by fire. The court ruled that under Sections 19 and 55 of the Insurance Code, the transfer of the property to Harding suspended the insurance to the equivalent of San Miguel's mortgage interest, as there was no corresponding transfer of the insurance policy. Therefore, San Miguel was only entitled to insurance proceeds up to the remaining mortgage amount, and Harding was not entitled to any additional proceeds.

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59 views1 page

San Miguel Vs Law Union and Rock Insurance Co

San Miguel insured property as the mortgagee after the owner Dunn requested the brewery company to procure insurance. Dunn then sold the property to Harding without assigning the insurance. The property was later destroyed by fire. The court ruled that under Sections 19 and 55 of the Insurance Code, the transfer of the property to Harding suspended the insurance to the equivalent of San Miguel's mortgage interest, as there was no corresponding transfer of the insurance policy. Therefore, San Miguel was only entitled to insurance proceeds up to the remaining mortgage amount, and Harding was not entitled to any additional proceeds.

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wuplawschool
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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San Miguel vs Law Union and Rock Insurance Co.

FACTS:
In the contract of mortgage, the owner P.D. Dunn had agreed, at his own expense, to
insure the mortgaged property for its full value and to indorse the policies in such
manner as to authorize the Brewery Company to receive the  proceeds in case of loss
and to retain such part thereof as might be necessary to satisfy the remainder then due upon
the mortgage debt. Instead, however, of effecting the insurance himself Dunn authorized and
requested the Brewery Company to procure insurance on the property in the amount of P15,000
at Dunn’s expense.
San Miguel insured the property only as mortgagee. Dunn sold the property to Henry
Harding. The insurance was not assigned by Dunn to Harding. Then it was destroyed by fire,
the two companies settled with San Miguel to the extent of the mortgage credit.
The RTC’s decision absolved the two companies from the difference. Henry Harding is
not entitled to the difference between the mortgage credit and the face value of the policies.
Henry Harding appealed.

ISSUE:
Whether or not San Miguel has insurable interest as mortgagor only to the extent of the
mortgage credit.

RULING:
YES. Under Sec 19 and Section 55 of the Insurance Code which states that:
Section 19: a change of interest in any part of a thing insured unaccompanied by a
corresponding change of interest in the insurance, suspends the insurance to an
equivalent extent, until the interest in the thing and the interest in the insurance are
vested in the same person.
Section 55: the mere transfer of a thing insured does not transfer the policy, buut
suspends it until the same person becomes the owner of both the policy and the thing
insured.
Undoubtedly these policies of insurance might have been so framed as to have been
“payable to the San Miguel Brewery, mortgagee, as its interest may appear, remainder
to whomsoever, during the continuance of the ris6, may  become the owner of the
interest insured.” (Sec. 54 Act No. 2427) Such a clause would have proved an intention to
insure the entire interest in the property, not merely the insurable interest of San Miguel
Brewery, and would have shown exactly to whom the money, in case of loss, should be paid.
However, policies are not so written.

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