FIRE INSURANCE

Megatron is the lessee of Decepticon Corporation (Decepticon). Under the lease agreement, Megatron cannot insure the properties
stored in the leased property without first obtaining the consent of Decepticon. If consent is not obtained, the policy is deemed
assigned and transferred to the lessor for its own benefit. Megatron insured the merchandize in the leased property without
obtaining the consent of the lessor. A fire broke out which destroyed the merchandize stored.

Is the lessor entitled to the proceeds of the policy?

No. Decepticon is not entitled to the proceeds of insurance. It has no insurable interest over the merchandize insured
because it is owned by Megatron. The automatic assignment of the policy is void for being contrary to law and public
policy.

JQ, owner of the condominium unit, insured the same against fire with XYZ Insurance Co., and made the loss payable to his
brother, MLQ. In case of loss by fire of the said condominium unit, who may recover on the fire insurance policy? State the
reason(s) for your answer. (2001 Bar Examination)

JQ is the one entitled to receive the proceeds of insurance being the owner thereof. MLQ despite being the designated as
the payee in case loss cannot be entitled to receive the premium since he has no insurable interest over the condominium
unit.

A obtains a fire insurance on his house and as a generous gesture names his neighbor as his beneficiary. If As house is destroyed
by fire, can B successfully claim against the policy? (1997 Bar Examination)

No. B has no insurable interest over the house of A. In fire insurance, 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.

Unlike life insurance, fire insurance does not have a provision for beneficiary designation unlike life insurance. A could
have just assigned his rights under policy in favor of B after the loss.

A owns a house worth P500,000. He insured it against fire for P250,000.00 for the period from January 1, 1977 to January 1, 1978.
At the instance of B, who is a judgment creditor of A, the said house was levied upon by the sheriff and sold at a public auction on
March 15, 1997.It was adjudicated to B for P150,000 at the auction sale. B insured the house against fire for P150,000 for the
period from March 16, 1977 to March 16, 1978. The house was accidentally burned on April 1, 1977.

May A recover under his policy? Give reasons.

May A recover under his policy? Give reasons. (1947 and 1974 Bar Examination)

Yes to both.

Insofar as A is concerned, he can recover since he is the owner of the property. While his property was already sold at a
public auction, the loss occurred within the one-year redemption period.

Insofar as B is concerned, he can also recover since he has an inchoate right over an existing right as the auction buyer of
the property. The extent of his insurable interest is equal to the amount he paid at the auction.

X insured his house for Php 8,000.00 on September 1, 1972. The house is worth Php 20,000.00. On said date X obtained a loan
from Y and the latter insured the said house for Php 5,000.00 because the total loan was without security. On September 10,
1978, X sold the house to Y without transferring his policy to Y. On September 27, 1972, the house was totally burned by fire of
accidental origin. Can X and Y recover on their respective policies? Explain fully. (1972 Bar Examination)

Insofar as Xs policy, both X and Y cannot recover thereunder.

X cannot recover because he is no longer the owner of the property at the time of the loss, thus, he lacks insurable
interest.

Y cannot recover because Xs policy was not endorsed under his name. While he has insurable interest by virtue of
being the new owner thereof, he cannot claim against the policy of X for not being a party thereto. He has no legal
personality to file a claim against the policy.

Insofar as Ys policy, Y cannot recover thereunder.