San Miguel v. Law Union Rock, 40 Phil.

674 (1920) Facts: San Miguel Brewery filed an action for the recovery from two insurance policies issued by Law Union and Rock Insurance Company (Ltd.), and the "Filipinas" Compania de Seguros, respectively, for the sum of P7,500 each, insuring certain property which has been destroyed by fire. The plaintiff, the San Miguel Brewery, is named as the party assured in the two policies referred to, but it is alleged in the complaint that said company was in reality interested in the property which was the subject of insurance in the character of a mortgage creditor only, and that the owner of said property upon the date the policies were issued was one D. P. Dunn who was later succeeded as owner by one Henry Harding. Accordingly said Harding was made a defendant, as a person interested in the subject of the litigation. Harding answered, admitting the material allegations of the complaint and claiming for himself the right to recover the difference between the plaintiff's mortgage credit and the face value of the policies. The two insurance companies also answered, admitting in effect their liability to the San Miguel Brewery to the extent of its mortgage credit, but denying liability to Harding on the ground that under the contracts of insurance the liability of the insurance companies was limited to the insurable interest of the plaintiff therein. Hence, Harding appealed said decision. Issue: Whether the insurance companies are liable to Harding. Held: NO. Harding is not a party to the contracts of insurance and cannot directly maintain an action thereon. His claim is merely of an equitable and subsidiary nature and must be made effective, if at all, through the San Miguel Brewery in whose name the contracts are written. Now the Brewery, as mortgagee of the insured property, undoubtedly had an insurable interest therein; but it could not, in any event, recover upon these policies an amount in excess of its mortgage credit. In this connection it will be remembered that Antonio Brias, upon making application for the insurance, informed the company with which the insurance was placed that the Brewery was interested only as a mortgagee. It would, therefore, be impossible for the Brewery mortgage on the insured property. It is declared that "the measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof" (sec. 16); while in the other it is stated that "the insurance shall be applied exclusively to the proper interest of the person in whose name it is made unless otherwise specified in the policy" (sec. 50).