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PHILIPPINE REPORTS ANNOTATED VOLUME 030

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[No. 9401. March 30, 1915.]

ANTONINA LAMPANO, plaintiff and

appellee, vs. PLACIDA A. JOSE ET AL.,
defendants and appellants.

1. INSURANCE; INTEREST OF BUILDING

CONTRACTOR.·A building contractor
has an insurable interest in the completed
building pending the payment of the
construction price.

538

538 PHILIPPINE REPORTS ANNOTATED

Lampano vs. Jose.

2. ID.; ID.; RIGHT TO PROCEEDS OF

POLICY.·A building contractor is not
obligated to surrender to the owner or her
grantees any part of the proceeds of a
policy insuring his own interest
exclusively and paid for by him, for the
mere reason that, at the time of the fire,
the amount of the policy exceeds that still
due him on the construction price.

APPEAL from a Judgment of the Court of

First Instance of Manila. Crossfield, J.
The facts are stated in the opinion of the
court.
D. R. Williams for appellants.
C. W. O'Brien for appellee.

TRENT, J.:
The defendant, Mariano R. Barretto,
constructed a house for the other
defendant, Placida A. Jose, on land
described as No. 72, plot F, Estate of
Nagtahan, district of Sampaloc, city of
Manila, for the agreed price of P6,000.
Subsequent thereto and on November 12,
1912, Placida A. Jose sold the house to the
plaintiff, Antonina Lampano, for the sum of
P6,000. On March 22, 1913, the house was
destroyed by fire. At the time of the fire
Antonina Lampano still owed Placida A.
Jose the sum of P2,000, evidenced by a
promissory note, and Placida A. Jose still
owed Mariano R. Barretto on the cost of the
construction the sum of P2,000. After the
completion of the house and sometime
before it was destroyed, Mariano R.
Barretto took out an insurance policy upon
it in his own name, with the consent of
Placida A. Jose, for the sum of P4,000. After
its destruction, he collected P3,600 from the
insurance company, having paid in
premiums the sum of P301.50.
The plaintiff alleged in her complaint
that there was a verbal agreement between
her and Placida A. Jose, at the time of the
purchase and sale of the house, to the effect
that the latter agreed to deliver to her the
insurance policy on the building; that she
did not learn that the policy was in the
name of Barretto until after the fire; and
that neither Placida A. Jose nor Mariano R.
Barretto has any right to the insurance or
to the money received therefrom. She

539

VOL. 30, MARCH 30, 1915 539

Lampano vs. Jose.

prayed for judgment against each of them

for the sum of P3,600, the amount of the
insurance collected.
To this complaint the defendant, Placida
A. Jose, answered, denying that she agreed
to transfer the policy of insurance to the
plaintiff and alleging (a) that the insurance
was taken out and paid for by Barretto
before the sale of the-house to the plaintiff;
(b) that Barretto did this because he had
constructed the house and she was owing
him therefor; and (c) that the insurance
was entirely for the personal account and in
the exclusive interest of Barretto. In her
cross-complaint she asked for judgment
against the plaintiff for the sum of P2,000,
the balance due on the purchase price.
Barretto answered, reciting the facts giving
rise to his taking out the insurance on the
house and denying any obligation to the
plaintiff in connection therewith.
Judgment was entered against Barretto
and in favor of Placida A. Jose for the sum
of P1,298.50, being the difference between
the amount collected by Barretto on the
insurance and the amount yet due him for
the construction of the house, including the
premiums paid. Judgment was also entered
in favor of the defendant, Placida A. Jose,
against the plaintiff for the sum of P2,000,
being the balance of the purchase price of
the house. The plaintiff was authorized to
offset this judgment against her for P2,000
by the P2,000 which the court declared had
been paid the defendant, Placida A. Jose, by
Barretto out of the insurance money. A final
judgment was entered in favor of the
plaintiff against the defendant, Placida A.
Jose, for the sum of P1,298.50, being the
amount of the judgment against Barretto.
From this judgment Barretto alone
appealed.
The court found that there was no
privity of contract between the plaintiff and
the defendant Barretto. In consequence, no
judgment was entered in favor of the
plaintiff against the defendant. The court
decided the respective rights of the two
defendants to the insurance money and
entered judgment against Barretto and in
favor of Placida A. Jose for the sum of
P1,298.50. This was done upon the theory
that the insurance policy was held in trust
for

540

540 PHILIPPINE REPORTS

ANNOTATED
Lampano vs. Jose.

Placida A. Jose, and that any balance,

resulting after deducting the amount owing
upon the construction contract and paid for
premiums, belonged to her. Neither by the
pleadings nor upon the trial was there any
claim made by Placida A. Jose against
Barretto for the insurance money, nor for
any participation therein. Placida A. Jose's
answer specifically alleged that such
insurance was for Barretto's personal
account and in his exclusive right. Her
testimony is equally positive upon this
point. She says:

"Q. Was the house insured when you sold it to

Antonina Lampano?·A. It was insured by
Mariano Barretto because he is the one who
constructed that house.
"Q. Did you have any interest in that
insurance?·A. I was indebted to him and he
insured the house in his own name from 1911.
"Q. Did you have any right, interest or
participation in that insurance?·A. I have none.
"Q. Who was paying the premiums on that
insurance?·A. M. Barretto."

The result is that there was no controversy

between the defendants concerning this
insurance, nor was any issue presented
which required an adjudication of their
respective rights thereto. So far as Barretto
was concerned, the only issue raised, either
by the pleadings or at the trial, was, Has
the plaintiff any right to recover from
Barretto any portion of the insurance
money?
The plaintiff sought to recover from
Barretto all of the P3,600, but she is now
contented with a judgment against Placida
A. Jose for P1,298.50. Her right to recover
this amount of the insurance rests upon an
alleged verbal agreement between herself
and Placida A. Jose to the effect that the
latter agreed, at the time of the purchase
and sale of the house, to transfer to her the
insurance policy, the policy being held in
trust by Barretto for the benefit of the Jose
woman. The plaintiff does not contend that
Barretto participated in this sale, or even
had any knowledge of it, until sometime
after it was consummated. Placida A. Jose
denies that she agreed to transfer the policy
to the plaintiff,

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VOL. 30, MARCH 30, 1915 541

Lampano vs. Jose.

and the deed of purchase and sale makes no

mention of such an agreement. The policy is
not mentioned in this document, although
it was agreed that the vendor would
transfer to the vendee all of the former's
right, title, and interest in the leasehold to
the land upon which the house was built. It
would seem that if the vendor agreed to
transfer the policy, this agreement would
have been inserted in the document of
purchase and sale, the same as that with
reference to the lease. The trial court did
not find that such an agreement existed
and we think the plaintiff has failed to
establish this verbal agreement.
If Barretto had an insurable interest in
the house, he could insure this interest for
his sole protection. The policy was in the
name of Barretto alone. It was, theref ore, a
personal contract between him and the
company and not a contract which ran with
the property. According to this personal
contract the insurance policy was payable
to the insured without regard, to the nature
and extent of his interest in the property,
provided that he had, as we have said, an
insurable interest at the time of the making
of the contract, and also at the time of the
fire. Where different persons have different
interests in the same property, the
insurance taken by one in his own right and
in his own interest does not in any way
inure to the benefit of another. This is the
general rule prevailing in the United States
and we find nothing different in this
jurisdiction. (19 Cyc., 883.)
In the case of Shadgett vs. Phillips &
Crew Co., reported in 56 L. R. A., 461, Mrs.
Shadgett received a piano as a gift from her
husband and insured it. She knew that it
was the obligation of her husband to insure
the piano for the benefit of the vendor. The
court held, however, that the vendor
(mortgagee) was not entitled to the
proceeds of the insurance as "there was no
undertaking on the part of Mrs. Shadgett to
either insure for complainant's benefit, or
to assume her husband's obligation to so
insure, and mere knowledge of that
obligation did not impose it upon her."
The court further said: "The contract of
insurance was

542

542 PHILIPPINE REPORTS

ANNOTATED
Lampano vs. Jose.

wholly between the defendant and the

insurance company, and was personal, in
the sense that the money agreed to be paid
in case of loss was not to stand in the place
of the piano itself, but was a mere
indemnity against the loss of defendant's
interest therein. // her interest was small,
on account of incumbrances existing in
favor of the complainant, that fact was for
the consideration only of the insurer and
defendant, for complainant has no concern
with the adjustment of the loss between
them. We know of no principle, either of law
or equity, which would bind defendant to
carry out her donor's contract to insure, in
the absence of any agreement on her part to
do so, even though the property in her
hands was subject to complainant's rights
therein as a conditional vendor."
The court further says: "A contract of
insurance made for the insurer's (insured)
indemnity only, as where there is no
agreement, express or implied, that it shall
be for the benefit of a third person, does not
attach to or run with the title to the insured
property on a transfer thereof personal as
between the insurer and the insured. In
such case strangers to the contract cannot
acquire in their own right any interest in
the insurance money, except through an
assignment or some contract with which
they are connected."
In Vandergraaff vs. Medlock (3 Porter,
389; 29 Am. Dec., 256), it was held that the
mortgagee is not entitled to the proceeds of
an insurance policy procured by the
mortgages, there being no agreement that
such insurance should be effected by the
latter for the benefit of the former. The
court says: "It is well settled that a policy of
insurance is a distinct independent contract
between the insured and insurers, and
third persons have no right either in a court
of equity, or in a court of law, to the
proceeds of it, unless there be some contract
or trust, expressed or implied, between the
insured and third persons."
In Burlingame vs. Goodspeed (10 L. R.
A., 495), the court says that where a
mortgagee at his own expense and without
any agreement or understanding with the
mortgagor obtains insurance upon his
interest as a mortgagee

543

VOL. 30, MARCH 30, 1915 543

Tuason vs. Crossfield and Sellner.

and collects the money from the insurer

after a loss, he is not bound to account for it
to the mortgagor.
In the case at bar Barretto assumed the
responsibility f or the insurance. The
premiums, as we have indicated, were paid
by him without any agreement or right to
recoup the amount paid therefor should no
loss result to the property. It would not,
therefore, be in accordance with law and his
contractual obligations to compel him to
account for the insurance money, or any
part thereof, to the plaintiff, who assumed
no risk whatever.
That Barretto had an insurable interest
in the house, we think there can be no
question. He constructed the building,
furnishing all the materials and supplies,
and insured it after it had been completed
(pars. 3 and 5, art. 1923, Civil Code;
Manresa, Vol. 12, pp. 692-695; citing
decision of the supreme court of Spain of
December 30, 1896).
For the foregoing reasons the judgment
appealed from, in so far as it affects the
appellant, is reversed and he is absolved.
Without costs. So ordered.

Arellano, C. J., Torres, Johnson,

Moreland, and Araullo, JJ., concur.

Judgment reversed.

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