Case Digest (G.R. No. 124520)
Case Digest (G.R. No. 124520)
Facts:
Spouses Nilo Cha and Stella Uy Cha, and United Insurance Co., Inc., petitioners, vs. Court of Appeals and CKS Development Corporation, respondents, G.R. No. 124520, August 18, 1997, Supreme Court First Division, Padilla, J., writing for the Court.
Petitioner-spouses Nilo and Stella Cha leased premises from private respondent CKS Development Corporation under a one-year lease dated 5 October 1988. Paragraph 18 of that lease provided that the lessee shall not insure chattels, merchandise or goods placed in the leased premises without the lessor's prior written consent, and that if the lessee obtained such insurance without consent, "the policy is deemed assigned and transferred to the lessor for its own benefit."
Contrary to that stipulation, the Cha spouses procured a fire insurance policy covering their merchandise inside the leased premises with United Insurance Co., Inc. for P500,000 without first obtaining CKS's written consent. A fire occurred on the day the lease was to expire, and CKS, upon learning of the insurance, demanded that United pay the policy proceeds directly to CKS pursuant to the lease provision.
When United refused, CKS filed suit against the Cha spouses and United. On 2 June 1992 the Regional Trial Court, Branch 6, Manila, adjudicated the case and ordered United to pay CKS P335,063.11 and ordered the Cha spouses to pay exemplary damages of P50,000, attorneys' fees of P20,000 and costs. On appeal, the Court of Appeals (CA-G.R. CV No. 39328) rendered a decision dated 11 January 1996 affirming the trial court but deleting the awards of exemplary damages and attorneys' fees; United's motion for reconsideration was denied on 29 March 1996.
The Cha spouses and United filed a petition for review on certiorari under Rule 45 seeking to set aside the Court of Appeals' decision. They assigned multiple errors, essentially challenging (1) the validity and enforceability of paragraph 18 of the lease as contrary to law, morals and public policy and as a contract of adhesion, (2) whether CKS — a non-party to the insurance policy and arguably lacking insurable interest — could be awarded the insurance proceeds, and (3) whether the assignment clause lacked consideration and was void for being dependent on CKS’s will.
Issues:
- Is paragraph 18 of the lease — deeming assigned to the lessor any fire insurance procured by the lessee without the lessor's consent — valid or is it void as contrary to law, morals and public policy?
- Can CKS Development Corporation, a party without an insurable interest in the Cha spouses' merchandise, be awarded the proceeds of the fire insurance policy, or can the insurer (United) be compelled to pay CKS?
- (Subsidiary) Does the Court resolve the Cha spouses' contractual liability to CKS for procuring insurance without consent?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)