Filipinas Compañia De Seguros v. Christern, Hunefeld & Co., Inc.

G.R. No. L-2294, [May 25, 1951], 89 PHIL 54-60

Doctrine:
The Philippine Insurance Law (Act No. 2427, as amended) in Section 8
provides that “anyone except a public enemy may be insured.” Therefore, it
stands to reason that an insurance policy ceases to be allowable at the time the
insured company becomes a public enemy, including those companies whose
major stockholders are subjects of an enemy state. There is payment, however,
but only covers the months prior to the insured company becoming a public
enemy.
Facts:
Christern, Huenefeld and Co., Inc. is a company whose major stockholders
are German. On October 1, 1941, they paid premiums and obtained a fire policy
from Filipinas Cia. de Seguros.
On December 10, 1941. the U.S. declared a war against Germany and
during the Japanese occupation of the Philippines, the building and insured
merchandise were destroyed by fire.
Christern claimed from Filipinas about the insurance policy. The salvaged
goods was auctioned and after deducting their value, the total loss suffered was
fixed at P92,650. Filipinas refused to pay the claim because they contended that
the policy cannot be enforced during this time due to the war and that Christen
was being controlled by Germans, the enemy of the company’s American
jurisdiction.
The Director of Bureau of Financing ordered Filipinas to pay the P92,650 to
Christen and which they complied.
After the filing of an action by the petitioner which the CFI dismissed, the
Court of Appeals further overruled the contention of the petitioner that the
respondent corporation became an enemy when the United States declared war
against Germany, relying on English and American cases which held that a
corporation is a citizen of the country or state by and under the laws of which it
was created or organized. It rejected the theory that the nationality of a private
corporation is determined by the character or citizenship of its controlling
stockholders.
Filipinas then filed a petition for certiorari to the Supreme Court.
Issue:
Whether or not the insurance policy became invalid upon the Declaration
of War.
Ruling:
Yes. The Philippine Insurance Law (Act No. 2427, as amended) in Section 8
provides that “anyone except a public enemy may be insured.” Therefore, it
stands to reason that an insurance policy ceases to be allowable as soon as an
insured becomes a public enemy. The fact that majority of the shareholders of
Christern, Hunefeld & Co., Inc. are German subjects, Christern thus became an
enemy corporation upon the outbreak of the war between the United States and
Germany.
Supreme Court ordered Christern to pay Filipinas the sum, amounting for
the unexpired term of the policy in question, beginning December 11, 1941,
which totaled to P77,208.33.