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LOSS CCC Insurance Corporation vs Court of Appeals Facts: Carlos F.

Robes took an insurance, with the CCC Insurance Corporation, on his Dodge Kingsway car against loss or damage through accident for an amount not exceeding P8,000.00 during the effectivity of the policy, the insured vehicle, while being driven by the owner's driver, became involved in a vehicular collision As the insurance company refused either to pay for the repair or to cause the restoration of the car -

of any enactment or regulation from driving such Motor Vehicle. appellant insurer insists that, under the established facts of this case, Reyes, being admittedly one who cannot read and write, who has never passed any examination for drivers, and has not applied for a license from the duly constituted government agency entrusted with the duty of licensing drivers, cannot be considered an authorized driver. The fatal flaw in appellant's argument is that it studiously ignores the provisions of law existing at the time of the mishap. Under Section 24 of the Revised Motor Vehicles Law, Act 3992 of the Philippine Legislature, as amended by Republic Acts Nos. 587, 1204 and 2863,1 An examination or demonstration to show any applicant's ability to operate motor vehicles may also be required in the discretion of the Chief, Motor Vehicles Office or his deputies. (Emphasis supplied) and reinforcing such discretion, Section 26 of the Act prescribes further: SEC. 26. Issuance of chauffeur's license; professional badge : If, after examination, or without the same, the Chief, Motor Vehicles Office or his deputies, believe the applicant to possess the necessary qualifications and knowledge, they shall issue to such applicant a license to operate as chauffeur ... (Emphasis supplied)

Robes filed a claim for recovery not only of the amount necessary for the repair of the insured car but also of actual and moral damages, attorneys' fees and costs. insurance company disclaimed liability for payment, alleging that there had been violation of the insurance contract because the one driving the car at the time of the incident was not an "authorized driver."

RTC - insurer was ordered to pay unto the former the cost of repair of the car in the sum of P5,031.28; the sum of P150.00, for the hauling and impounding of the car at the repair shop; P2,000.00 as actual damages; and P1,000.00 as attorneys' fee Court of Appeals affirmed

Issue: -

W/N the damage to the insured car was not covered by the insurance policy because at the time of the accident it was being driven by one who was not an authorized driver. NO STILL COVERED, Validity is assumed AUTHORIZED DRIVER: Any person driving on the Insured's order or with his permission, provided that the person driving is permitted in accordance with licensing laws or regulations to drive the motor vehicle covered by this Policy, or has been so permitted and is not disqualified by order of a court of law or by reason

It is thus clear that the issuance of a driving license without previous examination does not necessarily imply that the license issued is invalid. As the law stood in 1961, when the claim arose, the examinations could be dispensed with in the discretion of the Motor Vehicles Office official officials. Whether discretion was abused in issuing the license without examination is not a proper subject of inquiry in these proceedings, though, as a matter of legislative policy, the discretion should be eliminated. There is no proof that the owner of the automobile knew that the circumstance surrounding such issuance showed that it was irregular.

Held: -

The issuance of the license is proof that the Motor Vehicles Office official considered Reyes, the driver of the insured- appellee, qualified to operate motor vehicles, and the insured was entitled to rely upon such license.

In this connection, it should be observed that the chauffeur, Reyes, had been driving since 1957,2 and without mishap, for all the record shows. Considering that, as pointed out by the Court of Appeals, the weight of authority is in favor of a liberal interpretation of the insurance policy for the benefit of the party insured, and strictly against the insurer, We find no reason to diverge from the conclusion

reached by the Court of Appeals that no breach was committed of the abovequoted provision of the policy.

Country Bankers Insurance v. Llanga Bay and Community Multi purpose Cooperative 374 SCRA 653 January, 25, 2002 FACTS: The petitioner is a domestic corporation principally engaged in the insurance business wherein it undertakes, for a consideration, to indemnify another against loss, damage or liability from an unknown or contingent event including fire Respondent is a duly registered cooperative judicially declared insolvent and represented by the elected assignee, Cornelio Jamero. Petitioner and the respondent entered into a contract of fire insurance. Under Fire Insurance Policy, the petitioner insured the respondents stocks-intrade against fire loss, damage or liability during the period starting from June 20, 1989 at 4:00 p.m. to June 20, 1990 at 4:00 p.m., for the sum of Two Hundred Thousand Pesos (P200,000.00). On July 1, 1989, at or about 12:40 a.m., the respondents building was gutted by fire and reduced to ashes, resulting in the total loss of the respondents stocks-intrade, pieces of furnitures and fixtures, equipments and records. Due to the loss, the respondent filed an insurance claim with the petitioner, submitting: (a) the Spot Report of Pfc. Arturo V. Juarbal, INP Investigator, dated July 1, 1989; (b) the Sworn Statement of Jose Lomocso; and (c) the Sworn Statement of Ernesto Urbiztondo. The petitioner, however, denied the insurance claim on the ground that, based on the submitted documents, the building was set on fire by two (2) NPA rebels who wanted to obtain canned goods, rice and medicines as provisions for their comrades in the forest, and that such loss was an excepted risk under paragraph No. 6 of the policy conditions of Fire Insurance Policy No. F-1397, which provides: This insurance does not cover any loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences, namely: xxx xxx xxx

CA affirmed the decision of RTC In the instant case, the petitioner does not dispute that the respondents stocksin-trade were insured against fire loss, damage or liability under Fire Insurance Policy and that the respondent lost its stocks-in-trade in a fire that occurred on July 1, 1989, within the duration of said fire insurance. o The petitioner, however, posits the view that the cause of the loss was an excepted risk under the terms of the fire insurance policy.

ISSUE: Whether or not the cause of the loss was an excepted risk under the terms of the fire insurance policy and thus, Petitioner may deny the insurance claim HELD: Excepted risk; but- petitioner failed to prove it. Petitioner cannot deny insurance claim. Where a risk is excepted by the terms of a policy which insures against other perils or hazards, loss from such a risk constitutes a defense which the insurer may urge, since it has not assumed that risk, and from this it follows that an insurer seeking to defeat a claim because of an exception or limitation in the policy has the burden of proving that the loss comes within the purview of the exception or limitation set up. o If a proof is made of a loss apparently within a contract of insurance, the burden is upon the insurer to prove that the loss arose from a cause of loss which is excepted or for which it is not liable, or from a cause which limits its liability. o Stated else wise, since the petitioner in this case is defending on the ground of non-coverage and relying upon an exemption or exception clause in the fire insurance policy, it has the burden of proving the facts upon which such excepted risk is based, by a preponderance of evidence. But petitioner failed to do so.

The petitioner relies on the Sworn Statements of Jose Lomocso and Ernesto Urbiztondo as well as on the Spot Report of Pfc. Arturo V. Juarbal dated July 1, 1989, more particularly the following statement therein: xxx investigation revealed by Jose Lomocso that those armed men wanted to get can goods and rice for their consumption in the forest PD investigation further disclosed that the perpetrator are member (sic) of the NPA PD end x x x The Sworn Statements of Jose Lomocso and Ernesto Urbiztondo are inadmissible in evidence, for being hearsay, inasmuch as they did not take the witness stand and could not therefore be cross-examined. o The said Spot Report is admissible only insofar as it constitutes part of the testimony of Pfc. Arturo V. Juarbal since he himself took the witness stand and was available for cross-examination. o The petitioners evidence to prove its defense is sadly wanting and thus, gives rise to its liability to the respondent under Fire Insurance Policy. Rate of interest, awards of damages, litigation expenses, attorneys fees: o The insurance claim in this case is evidently not a forbearance of money, goods or credit, and thus the interest rate should be as it is hereby fixed at six percent (6%) computed from the date of filing of the complaint. o

(d) Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped power. Any loss or damage happening during the existence of abnormal conditions (whether physical or otherwise) which are occasioned by or through or in consequence, directly or indirectly, of any of said occurrences shall be deemed to be loss or damage which is not covered by this insurance, except to the extent that the Insured shall prove that such loss or damage happened independently of the existence of such abnormal conditions. Respondent then instituted in the trial court the complaint for recovery of "loss, damage or liability" against petitioner. RTC in favor of Respondent

o o

o o

We find no justification for the award of actual damages of Fifty Thousand Pesos (P50,000.00). Well-entrenched is the doctrine that actual, compensatory and consequential damages must be proved, and cannot be presumed. That part of the dispositive portion of the Decision of the trial court ordering the petitioner to pay actual damages of Fifty Thousand Pesos (P50,000.00) has no basis at all. Concerning the award of exemplary damages for Fifty Thousand Pesos (P50,000.00), we likewise find no legal and valid basis for granting the same. With respect to the award of litigation expenses and attorneys fees, Article 2208 of the New Civil Code17enumerates the instances where such may be awarded and, in all cases, it must be reasonable, just and equitable if the same were to be granted. Attorneys fees as part of damages are not meant to enrich the winning party at the expense of the losing litigant. As such, it is necessary for the court to make findings of facts and law that would bring the case within the exception and justify the grant of such award. We find none in this case to warrant the award by the trial court of litigation expenses and attorneys fees in the amounts of Five Thousand Pesos (P5,000.00) and Ten Thousand Pesos (P10,000.00), respectively, and therefore, the same must also be deleted.

the insurance was of no legal force and effect with the company. o "the policy of insurance did not cover any loss or damage occasioned by explosion," and that the loss was occasioned by an explosion, and was not covered by the policy. policy provides that, if the claim is fraudulent, and that any false declaration was made or used to obtain it, all benefits are thereby forfeited; that the claim of the plaintiff is fraudulent as to the quantity and value of the insured property at the time of the fire. the policy becomes forfeited if a loss is occasioned by the willful act or connivance of the insured, and that the loss in question was caused by the willful act of Peter Johnson

ISSUE: Whether or not the Insurance company is liable to the loss JOHNS, J.: Policy reads That in consideration of Messrs. Paris-Manila Perfumery Co. (Peter Johnson, Prop.), Cavite, P. I., xxx It also appears that the premium on the policy was paid to the defendant by a company check, which was signed by Johnson, and that the policy in question was prepared by the defendant. The real cause of the fire is more or less a matter of conjecture , upon which there is little, if any, evidence. The cause of the explosion was and is unknown and wholly a matter of conjecture. Neither peter Johnson nor Francisco Banta (the only persons in the building at the time) claimed that either of them saw anything explode. Both Johnson and Banta testified that they heard an explosion, and when they looked around, they saw fire and felt heat. There is no evidence as to whether the fire was started before or after the explosion. Neither is there any competent testimony as to the cause of the explosion. The factory where the fire occurred was filed with numerous kinds of essences and oils used in the manufacture of perfumery and with a quantity of alcohol and manufactured perfumes, all of which were of a highly inflammable nature, and the fire may have started from any one of a number of reasons. But in the final analysis, the fact remains that there was a fire, and that the plaintiffs property was destroyed. It is true that it may be that the explosion was the primary cause of the fire, but that is only a matter of conjecture, and upon that point, the burden of proof was upon the defendant. Defendant relies upon section 6 of the policy, as follows: 6. Unless otherwise expressly stated in the policy the insurance does not cover

PARIS-MANILA PERFUME CO vs PHOENIX ASSURANCE CO., LTD FACTS: Paris-Manila Perfume- domestic corporation engaged in the manufacture of perfumery and toilet articles. Phoenix Assurance- organized under the laws of Great Britain, and engaged in the fire insurance business in the Philippine Islands. Phoenix issued fire insurance policy to the properties of Paris-Manila It is alleged that with the knowledge of the defendant, the property was also insured in two other companies, Property covered by the insurance was completely destroyed by fire for the total loss Defendant wrongfully and unjustly refused to pay it Paris Manila requested the defendant to appoint an arbitrator under the provisions of section 17 of the policy, which was also denied Defendant denied any liability and refused arbitration o o SPECIAL DEFENSES policy in question was issued "to one Peter Johnson, as proprietor of Paris-Manila Perfumery Co.," and that the company was not the insured named in the policy, and that

(h) Loss or damage occasioned by the explosion; but loss or damage by explosion of gas for illuminating or domestic purposes in a building in which gas is not generated and which does not form a part of any gas works, will be deemed to be loss by fire within the meaning of this policy. In answer to that, plaintiff relies upon section 5, which is as follows: 5. The insurance does not cover

(d) Loss or damage occasioned directly or indirectly, approximately or remotely by or through or in consequence of: (1) Earthquake, hurricane, volcanic eruption or other convulsion of nature, and the company shall not be liable for loss or damage arising during or within a reasonable time after any of the said occurrences, unless it be proved by the insured to the satisfaction of the company that such loss or damage was not in any way occasioned by or through or in consequence of any of the said occurrences. It will be noted that section 5 excludes not only the damages which may immediately result from an earthquake, but also any damage which may follow the earthquake, and that section 6 excludes only the damages which are the direct result of the explosion itself , and that it does not except damages which occurred from the fire occuring after the explosion, even though the explosion may have been the primary cause of the fire. But assuming, without deciding, that if it be a fact that the fire resulted from an explosion that fact, if proven, would be a complete defense, the burden of the proof of that fact is upon the defendant, and upon that point, there is a failure of proof. There is no competent evidence as to whether the explosion caused the fire or the fire caused the explosion. The defendant has assigned numerous and different errors, but exclusive of the first and second, they are largely question of facts and objections to the admissibility of the evidence, and upon all of the material questions of fact, the lower court found for the plaintiff. That is to say, the lower court found as a fact that there was no fraud in the insurance, and that the value of the property destroyed by the fire was more than the amount of the insurance. The defendant having issued its policy which was in legal force and effect at the time of the fire, it is bound by its terms and conditions, and the property having been destroyed, the burden of proof was upon the defendant to show that it was exempt from liability under the terms and conditions of the policy, and upon that point, there is a failure of proof.

FACTS: - two separate petitions assailing the decision of the CA on the case of San Miguel corp vs Estate of Ang Gui and Co To vs FGU Insurance - ANCO, partnership between Ang Gui and Co To, was engaged in the shipping business. Since D/B Lucio barge had no engine, it had to be towed by a tugboat - On Sept 23, 1979, San Miguel (SMC) shipped from Cebu to Antique and Iloilo on board the D/B Lucio, towed by M/T ANCO, certain beers and wines - On Sept 30, 1979 1PM, the vessels arrived at San Jose and the tugboat left. At that time, the clouds were dark and waves were already big - SMC's District Sales Supervisor, Macabuag, requested ANCO's representative to transfer the barge to a safer place but refused to comply - On Oct 1, 1979, 11pm, the crew of D/B Lucio abandoned the vessel because the barge's rope attached to the wharf was cut off by the big waves. The barge was broken and the cargoes of beer were swept away. Only 10,790 cases were discharged - ANCO failed to deliver 29,210 cases of Pilsen and 550 cases of Cerveza Negra - SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO amounting to P1,346,197 - Upon Ang Gui's death, ANCO (partnership), was dissolved on Jan 26, 1993 - SMC filed another complaint impleading the surviving partner Co To and the Estate of Ang Gui - ANCO claimed that it had an agreement with SMC that they will not be liable for any losses or damages resulting to the cargoes by reason of fortuitous event and they have an agreement that SMC should insure the cargoes in order to recover indemnity in case of loss - 20,000 cases was insured with FGU insurance for total of P858,500 - ANCO claimed that the loss of said cargoes occurred as a result of risks insured against in the insurance policy and during the existence and lifetime of the said insurance policy and FGU should be held liable to indemnify or reimburse ANCO it may be required to pay to SMC - FGU claimed that it is not covered under the insurance policy since they are only liable to these 3 cases: (1) total loss of the entire shipment (2) loss of any case as a result of the sinking of the vessel (3) loss as a result of the vessel being on fire - FGU also alleged that ANCO and SMC failed to exercise ordinary diligence or diligence of a good father of a family in the care and supervision of the cargoes - TC and CA found that ANCO failed to observe the degree of diligence required that would exonerate them from liability. FGU is only liable for 35% of the lost cargoes. The risk insured against was the cause of the loss > Defendants as assured, were considered as co-insurers of FGU to the extent of P975,405 (53%). > There was partial loss of P1,346,197 ISSUE: 1. WoN doctrine of res judicata applies in this case? 2. WoN FGU is liable under the insurance contract considering the circumstances surrounding the loss of the cargoes? RULING: 1. NO - In order for res judicata to be made applicable in a case, the following essential requisites must be present: 1) the former judgment must be final; 2) the former judgment must have been rendered by a court having jurisdiction over the subject matter and the parties; 3) the former judgment must be a judgment or order on the merits; and 4) there must be between the first and second action identity of parties, identity of subject matter, and identity of causes of action

FGU Insurance vs CA TOPIC: Loss _________________________________________________________

- The last essential requisite was absent in this case - the subject matter in the other case was the insurance contract while the subject matter in this case is the loss of the cargoes of SMC\ - The doctrine of res judicata precludes the re-litigation of a particular fact or issue already passed upon by a court of competent jurisdiction in a former judgment, in another action between the same parties based on a different claim or cause of action. The judgment in the prior action operates as estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or judgment was rendered - If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit - decision in the first case, however, did not pass upon the issues raised in the instant case. Absent therein was any discussion regarding the liability of ANCO for the loss of the cargoes. Neither did the lower court pass upon the issue of the alleged negligence of the crewmembers of the D/B Lucio being the cause of the loss of the cargoes owned by SMC. 2. (NO) - It is not the function of the SC to review the factual findings of the lower courts which are based on substantial evidence. There's no cogent reason to fault the findings of the lower courts - ANCO has knowledge of the fact that D/B Lucio has no engine and yet, their Tugboat left it for itself notwithstanding the signs of impending storm - the captain of the tugboat should have place D/B Lucio in a very safe location. They have failed to observe extraordinary diligence as required by CC 1733 - The fact that other vessels were transferred already to Malandong shows that it is definitely safer there than the port of San Jose Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss . However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm, or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods . . . (Emphasis supplied) - The calamity in this case was not unforeseen nor was it unavoidable since other vessels managed to transfer to another place - The records clearly show the failure of petitioners representatives to exercise the extraordinary degree of diligence mandated by law. To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss. FGU INSURANCE - a basic rule in insurance that the carelessness and negligence of the insured or his agents constitute no defense on the part of the insurer - This rule presupposes that the loss has occurred due to causes which could not have been prevented by the insured, despite the exercise of due diligence - willful exposure, gross negligence, negligence amounting to misconduct, etc., have often been held to release the insurer from such liability (Standard Marine vs Nome Beach) - it was never supposed that the insured could recover indemnity for a loss occasioned by his own wrongful act or by that of any agent for whose conduct he was responsible (Williams vs New England Insurance)

- while mistake and negligence of the master or crew are incident to navigation and constitute a part of the perils that the insurer is obliged to incur, such negligence or recklessness must not be of such gross character as to amount to misconduct or wrongful acts; otherwise, such negligence shall release the insurer from liability under the insurance contract - In this case, Lower Courts have concluded that the crew members were blatantly negligent. It was shown when the tugboat left immediately and when the representative of defendant did not heed Macabuag's request to move the vessel into a safer place - The negligence of the defendants-appellants is proved by the fact that on 01 October 1979, the only simple vessel left at the wharf in San Jose was the D/B Lucio - that ANCOs representatives had failed to exercise extraordinary diligence required of common carriers in the shipment of SMCs cargoes NOTICE AND PROOF OF LOSS Malayan Insurance vs. Cruz-Arnaldo, 154 SCRA 672 (1987) FACTS: June 7, 1981: Malayan insurance co., inc. (MICO) issued to Coronacion Pinca, Fire Insurance Policy for her property effective July 22, 1981, until July 22, 1982

October 15,1981: MICO allegedly cancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca December 24, 1981: payment of the premium for Pinca was received by Domingo Adora, agent of MICO January 15, 1982: Adora remitted this payment to MICO,together with other payments January 18, 1982: Pinca's property was completely burned February 5, 1982: Pinca's payment was returned by MICO to Adora on the ground that her policy had been cancelled earlier but Adora refused to accept it and instead demanded for payment

Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission. The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again after June 13, 1981, date of its receipt of notice of the denial of the said motion for reconsideration. As the herein petition was filed on July 2, 1981, or nineteen days later, there is no question that it is tardy by four days.

Insurance Commission: favored Pinca

MICO appealed

a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code.

ISSUE: W/N MICO should be liable because its agent Adora was authorized to receive it

As for the method of cancellation, Section 65 provides as follows:

HELD: YES. petition is DENIED

SEC. 65.

All notices of cancellation mentioned in the preceding section shall be

in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied

SEC. 77.

An insurer is entitled to payment of the premium as soon as the thing

upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based.

is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.

A valid cancellation must, therefore, require concurrence of the following conditions:

o o o o

There must be prior notice of cancellation to the insured; The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds mentioned; The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy; It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will furnish the facts on which the cancellation is based.

SEC. 306. xxx xxx xxx

Any insurance company which delivers to an insurance agent or insurance broker a policy or contract of insurance shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon.

Payment to an agent having authority to receive or collect payment is equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal.

All MICO's offers to show that the cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our

SEC. 64.

No policy of insurance other than life shall be cancelled by the insurer

mailing section." without more

except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:

It stands to reason that if Pinca had really received the said notice, she would not have made payment on the original policy on December 24, 1981. Instead, she would have asked for a new insurance, effective on that date and until one year later, and so taken advantage of the extended period.

o o o o o

non-payment of premium; conviction of a crime arising out of acts increasing the hazard insured against; discovery of fraud or material misrepresentation; discovery of willful, or reckless acts or commissions increasing the hazard insured against; physical changes in the property insured which result in the property becoming uninsurable;or

Incidentally, Adora had not been informed of the cancellation either and saw no reason not to accept the said payment Although Pinca's payment was remitted to MICO's by its agent on January 15, 1982, MICO sought to return it to Adora only on February 5, 1982, after it presumably had learned of the occurrence of the loss insured against on January 18, 1982 make the motives of MICO highly suspicious

Yu Ban Chuan v Fieldmens Insurance Co (1965) FACTS Yu Ban Chuan is a chinese man doing business of wholsesale deaing in gereneral merhcandise and school supplies under the name of CMC Trading. His business was first situated in Nueva Street, Manila. While at this place, plainitff insured against first his stock merchandise with open policies from 2 insurance companies. When he transferred his business to Muelle de Binondo. Manila, his 2 insurers agreed to have the coverage of his policy transferred to the new premises and acknowledged the existence of co insurance. Less than a month after his transfer, Yu Buans business establishment in Binondo was totally destroyed by fire. Because of Yu Ban's non-compliance or failure to submit the required documents and the adjusters' demand in subsequent letters that he submit additional papers, the adjusters and Yu Ban engaged in an exchange of communications, until finally Fieldmans Insurance rejected Yu Ban's claims, and denied liability under their respective policies, evidently upon their respective adjusters' recommendations. The plaintiff commenced suit in the Court of First Instance of Manila, and the defendants answered the complaint with identical special defenses; to wit: 1. Insured's failure to prove the loss claimed; 2. false and fraudulent claim; and 3. arson or causes not independent of the will of the insured; and counterclaims for the annulment of the policies. In proving the value of his loss, the plaintiff relied upon a merchandise inventory as of 31 December 1959, which he had allegedly submitted on 15 January 1960 to the Bureau of Internal Revenue. ISSUE Whether Yu Ban is bound to provide the insurance company a proof of loss. HELD: NO. Shielding himself under Section 82 of the Insurance Act, the plaintiff asserts that in submitting his proof of loss he was "not bound to give such proof as would be necessary in a court of justice". The assertion is correct, but does not give him any justification for submitting false proofs. Their falsity is the best evidence of the fraudulent character and the unmeritoriousness of plaintiff's claim. The fact of the filing of the inventory as of 15 January 1960 should be considered as true, since there is no evidence to the contrary. However, it was an error of the trial court of accepting as true the actual existence at the burned premises of the stocks mentioned in the inventory. Six (6) of the many copies of the invoices submitted by the plaintiff to the adjusters uncover a clear case of fraud and misrepresentation

1. 2. 3.

Manager of one of the suppliers denied signing the purchase invoice in favor of petitioner There were dubious invoices issued by fictitious companies. There were invoices indicating that merchandise were delivered to the new place of business even way before it transferred on 15 January 1960. The plaintiff, Yu Ban Chuan, adopted a uniform, too uniform, in fact, to be believed, explanation for all the invoices: that he did not buy the merchandise at the companies' addresses but bought from the agents who brought the goods to him; that the originals of the invoices were burned and that he requested for true copies from the agents whom he met casually in the streets after the fire and these agents delivered the exhibits to him; but he did not remember, or know the names of these agents, nor did he know their whereabouts. In other words, he wants the court to believe also that these agents performed a vanishing act after each one of them had turned in the copy of each invoice to the plaintiff.

The plaintiff adheres to the inventory as the immaculate basis for the actual worth of stocks that were burned, on the ground that it was made from actual count, and in compliance with law. But this inventory is not binding on the defendants, since it was prepared without their intervention. It is well to note that plaintiff had every reason to show that the value of his stock of goods exceeded the amount of insurance that he carried. And the inventory, having been made prior to the fire, was no proof of the existence of these goods at the store when the fire occurred. True, there were merchandise that were actually destroyed by fire. But when fraud is conceived, what is true is subtly hidden by the schemer beneath proper and legal appearances, including the preparation of the inventory. The filing of collection suits for unpaid purchases against Yu Ban Chuan, however valid these may be, do not legitimize his fraudulent claim against the insurers in the present case, nor show that the goods allegedly delivered were at the store when the fire occurred. It is markworthy that in some instances the debts are only attested by certifications from the creditors.

Go Lu vs. Yorkshire Insurance co. The plaintiff was a merchant engaged in the purchase and sale of bolt goods in the city of Manila, with his place of business in a bodega, which he occupied in common with the Eastern Asia Commercial Company. The building was constructed of stone with an upper framework of wood and an iron roof. The defendants, YORKSHIRE INSURANCE COMPANY, are fire insurance companies duly licensed to do business in the Philippine Islands.

A fire occurred in that portion of the building occupied by the Eastern Asia Commercial Company, resulting in a loss and damage to the plaintiff's goods, which were insured. At the time of the fire, he claims that the was the owner of 66 cases of bolt goods bodega, and that there was a total loss of 50 cases, and that the remaining 16 seriously damage.

in the were

Where the proof shows that all of plaintiffs bolt goods were together in one corner of the building, and the plaintiffs claims that there were 66 different boxes or bales of foods destroyed in the fire, it devovles upon him to prove the by a propenderance of evidence that the 66 bales were consumed or destroyed by the fire, and he can only recover for the number of bales shown to have been destroyed. Where after the fire there is evidence that sixteen boxes or bales of goods were found in a damaged condition, and that the testimony is conclusive that there was no remaining evidence of any kind after the fire of the loss or destriction of the other 50 bales , it creates a presumption which is the duty of the plaintiff to overcome by competent and satisfactory evidence.

After making proof of his claims and the failure to agree with the insurance companies after some negotiations as to the amount of his loss, the plaintiff commenced this action against the Yorkshire Insurance Company and the Scottish Union and National Insurance Company, in which he seeks to recover from each of them the full amount of their respective policies. The insurance copmpany contends that not more than 16 cases of plaintiff's goods were destroyed As a further and separate defense, they allege that plaintiff submitted fraudulent proof of the amount of his loss, and that, for such reason, he is not entitled to recover anything. They also contend that the plaintiff violated the express terms of the policies in keeping his goods in the same building where hemp was stored. Issue: Is the original books of entry enough to prove actual damage? Held: No! the books of entry is not sufficient to establish his case, by preponderance of evidence where the testimony is conclusive that right after the fire there was no evidence or trace of anything lef of more than 16 cases. For the purpose of proving the number of cases of goods in the building, the plaintiff offered and introduced in evidence certain original books of entry which were kept in the Chinese language, together with a translation of the into Spanish. It appears that the trial court attached much importance to the original entries in plaintiff's books. The vital question here is the number of cases of piece goods that were in the bodega at the time of the fire. The books offered in evidence might tend to prove that, during the months of April, May, and June, the plaintiff purchase 87 cases of goods, and that he had 50 cases in stock in the month of March, from and out of which he sold 71 cases, but the entries made in the books are not any evidence that the goods when purchased were delivered to, and placed in, this particular bodega, or that when sold, they were taken from, and out of, that bodega. In an action on a fire insurance policy to recover the value of bolt goods alleged to have been destroyed bt fire, it devolves upon the plaintiff to prove the amount of his loss by a proponderance of the evidence.

In this case, George B. Blake was department, was there a few minutes after the alarm, and had charge of the fire. He was called as a witness for the defense, and his evidence of what he was and the surrounding circumstances is clear and convincing. He testified that he did not see more than 16 cases, and that there was no evidence of any loss, destruction, or damage of any more than 16 cases.

The court will legally presume that in an ordinary fire, 50 bales or boxe of bolt goods of cloth cannot be wholly consumed or totally destroyed, and that in the very nature of things some trace or evidence will be left remaining of their loss or destruction.

Among other conditions of the policy, section 13 provides:

If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under this Policy; or, if the loss or damage be occasioned by the wilfull act, or with the connivance of the Insured; or, if the Insured or anyone acting on his behalf shall hinder or obstruct the Company in doing any of the acts referred to in Condition 12; or, if the claim be made and rejected and an action or suit be not commenced within three months after such rejection, or (in case of an Arbitration taking place in pursuance of the 18th Condition of this Policy) within three months after the Arbitrators or Umpire shall have made their award, al benefit under this Policy shall be forfeited.

Under all of the surrounding facts and circumstances, it is the opinion of the writer that this section should not be enforced, and that the plaintiff should have judgment for the amount of his actual loss. Be that as it may, the majority of the court are of the opinion that the above analysis of the facts not only establishes the amount of plaintiff's actual loss, but

that it also is conclusive that plaintiff's claim was fraudulent, and that he knew it was fraudulent when he made it. His proof of claim was for 66 cases of piece goods of the actual loss to be P7,594.67.

prove the loss. Trial ensued. On 6 July 1994, the trial court rendered judgment in favor of Usiphil. It ordered Finman to pay Usiphil the sum of P842,683.40 and to pay 24% interest per annum from 28 February 1985 until fully paid; the sum equivalent to 10% of the principal obligation as and for attorney's fees, plus P1,500.00 per court appearance of counsel; the amount of P30,000.00 as exemplary damages in addition to the actual and compensatory damages awarded. The court also dismissed the claim of P30,000.00 for actual damages under par. 4 of the prayer, since the actual damages has been awarded under par. 1 of the decision's dispositive portion; dismissed the claim of interest under par. 2 of the prayer, there being no agreement to such effect; dismissed the counter-claim for lack of merit; and ordered Finman to pay the cost of suit. On appeal, the CA substantially affirmed the decision of the trial court. The appellate court modified the decision by ordering Finman to pay Usiphil the sum of P842,683.40 and to pay 24% interest per annum from 3 May 1985 until fully paid. Finman filed the petition for review on certiorari. Issue (1): Whether Usiphil has complied with Policy Condition 13 in notifying Finman of the loss. Held (1): YES. Usiphil had substantially complied with Policy Condition 13 which reads: "The insured shall give immediate written notice to the Company of any loss, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged, and undamaged property, showing in detail quantities, costs, actual cash value and the amount of loss claimed; AND WITHIN SIXTY DAYS AFTER THE LOSS,UNLESS SUCH TIME IS EXTENDED IN WRITING BY THE COMPANY, THE INSURED SHALLRENDER TO THE COMPANY A PROOF OF LOSS, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following: the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or exposures of said property since the issuing of this policy by whom and for what purpose any buildings herein described and the several parts thereof were occupied at the time of loss and whether or not it then stood on leased ground, and shall furnish a copy of all the descriptions and schedules in all policies, and if required verified plans and specifications of any building, fixtures, or

The validity of the clause above quoted is sustained by numerous uniform decisions, and is valid.

Here, the facts existing at and after the fire are conclusive evidence that there were only 16 cases of goods in the bodega at the time of the fire, and the majority of this court are of the opinion that plaintiff's claim is not only fraudulent, but that he knew it was fraudulent at the time it was made, and that, for such reason, he is not entitled to recover anything.

The judgment of the lower court is reversed, and the complaint dismissed, with costs in favor of the appellants. Finman General Assurance Corporation vs. Court of Appeals Facts: On 15 September 1981, Usiphil Incorporated obtained a fire insurance policy from Finman General Assurance Corporation (then doing business under the name Summa Insurance Corporation) covering certain properties, e.g., office, furniture, fixtures, shop machinery and other trade equipment. Under Policy F3100 issued to Usiphil, Finman undertook to indemnify Usiphil for any damage to or loss of said properties arising from fire. Sometime in 1982, Usiphil filed with Finman an insurance claim amounting to P987,126.11 for the loss of the insured properties due to fire. Acting thereon, Finman appointed Adjuster H.H. Bayne to undertake the valuation and adjustment of the loss. H.H. Bayne then required Usiphil to file a formal claim and submit proof of loss. In compliance therewith, Usiphil submitted its Sworn Statement of Loss and Formal Claim, dated 22 July 1982, signed by Reynaldo Cayetano, Usiphil's Manager. Usiphil likewise submitted Proof of Loss signed by its Accounting Manager Pedro Palallos and countersigned by H.H. Bayne's Adjuster F.C. Medina. Palallos personally followed-up Usiphil's claim with Finman's President Joaquin Ortega. During their meeting, Ortega instructed their Finance Manager, Rosauro Maghirang, to reconcile the records. Thereafter, Maghirang and Palallos signed a Statement/Agreement, dated 28 February 1985, which indicated that the amount due Usiphil was P842,683.40. Despite repeated demands by Usiphil, Finman refused to pay the insurance claim. Thus, Usiphil was constrained to file a complaint against Finman for the unpaid insurance claim. In its Answer, Finman maintained that the claim of Usiphil could not be allowed because it failed to comply with Policy Condition 13 regarding the submission of certain documents to

machinery destroyed or damaged. The insured, as often as may be reasonably required, shall exhibit to any person designated by the company all that remains of any property herein described, and submit to examination under oath by any person named by the Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices, and other vouchers or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by the Company or its representative and shall permit extracts and copies thereof to be made. No claim under this policy shall be payable unless the terms of this condition have been complied with." A perusal of the records shows that Usiphil, after the occurrence of the fire, immediately notified Finman thereof. Thereafter, Usiphil submitted the following documents: (1) Sworn Statement of Loss and Formal Claim and; (2) Proof of Loss. The submission of these documents constitutes substantial compliance with the above provision. Indeed, as regards the submission of documents to prove loss, substantial, not strict as urged by Finman, compliance with the requirements will always be deemed sufficient. In any case, Finman itself acknowledged its liability when through its Finance Manager, Rosauro Maghirang, it signed the document indicating that the amount due Usiphil is P842,683.40. Issue (2): Whether the payment of 24% interest per annum is authorized by Sections 243 and 244 of the Insurance Code. Held (2): YES. Anent the payment of 24% interest per annum computed from 3 May 1985 until fully paid, the same is authorized by Sections 243 and 244 of the Insurance Code. Notably, under Section 244, a prima facie evidence of unreasonable delay in payment of the claim is created by the failure of the insurer to pay the claim within the time fixed in both Sections 243 and 244. Further, Section 29 of the policy itself provides for the payment of such interest: "Settlement of claim clause: The amount of any loss or damage for which the company may be liable, under this policy shall be paid within thirty days after proof of loss is received by the company and ascertainment of the loss or damage is made either in an agreement between the insured and the company or by arbitration; but if such ascertainment is not had or made within sixty days after such receipt by the company of the proof of loss, then the loss or damage shall be paid within ninety days after such receipt. Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board unless such failure or refusal to pay is based on the grounds (sic) that the claim is fraudulent."

The policy itself obliges Finman to pay the insurance claim within 30 days after proof of loss and ascertainment of the loss made in an agreement between Usiphil and Finman. Finman and Usiphil signed the agreement indicating that the amount due Usiphil was P842,683.40 on 2 April 1985. Finman thus had until 2May 1985 to pay Usiphil's insurance. For its failure to do so, the Court of Appeals and the trial court rightfully directed Finman to pay, inter alia, 24% interest per annum in accordance with the above quoted provisions.

Pacific Timber Export Corporation vs. Court of Appeals [GR L-38613, 25 February 1982] Facts: On 19 March 1963, the Pacific Timber Export Corporation (PTEC) secured temporary insurance from the Workmen's Insurance Company Inc. (WICI) for its exportation of 1,250,000 board feet of Philippine Lauan and Apitong logs to be shipped from the Diapitan Bay, Quezon Province to Okinawa and Tokyo, Japan. WICI issued on said date Cover Note 1010, insuring the said cargo of PTEC "Subject to the Terms andConditions of the WORKMEN'S INSURANCE COMPANY, INC. printed Marine Policy form as filed withand approved by the Office of the Insurance Commissioner." The total cargo insured under the two marinepolicies accordingly consisted of 1,395 logs, or the equivalent of 1,195,498 bd. ft. After the issuance of CoverNote 1010, but before the issuance of the two marine policies 53 HO 1032 and 53 HO 1033, some of the logsintended to be exported were lost during loading operations in the Diapitan Bay. The logs were to be loaded on the 'SS Woodlock' which docked about 500 meters from the shortline of the Diapitan Bay. The logs were taken from the log pond of PTEC and from which they were towed in rafts to the vessel. At about 10:00 a.m.on 29 March 1963, while the logs were alongside the vessel, bad weather developed resulting in 75 pieces of logs which were rafted together to break loose from each other 45 pieces of logs were salvaged, but 30 pieces were verified to have been lost or washed away as a result of the accident. In a letter dated 4 April 1963,PTEC informed WICI about the loss of approximately 32 pieces of logs during loading of the SS Woodlock. Although dated 4 April 1963, the letter was received in the office of WICI only on 15 April 1963. PTEC subsequently submitted a Claim Statement demanding payment of the loss under Policies 53 HO 1033, and 53HO 1033, in the total amount of P19,286.79. On 17 July 1963, WICI requested the First PhilippineAdjustment Corporation to inspect the loss and assess the damage. The adjustment company submitted itsReport on 23 August 1963. In said report, the adjuster found that 'the loss of

30 pieces of logs is not coveredby Policies 53 HO 1032 and 1033 inasmuch as said policies covered the actual number of logs loaded onboard the SS Woodlock. However, the loss of 30 pieces of logs is within the 1,250,000 bd. ft. covered byCover Note 1010 insured for $70,000.00. On 14 September 1963, the adjustment company submitted acomputation of WICI's probable liability on the loss sustained by the shipment, in the total amount ofP11,042.04. On 13 January 1964, WICI wrote PTEC denying the latter's claim, on the ground that its investigation revealed that the entire shipment of logs covered by the two marine policies 53 HO 1032 and 53HO 1033 were received in good order at their point of destination. It was further stated that the said loss ma not be considered as covered under Cover Note 1010 because the said Note had become null and void byvirtue of the issuance of Marine Policies 53 HO 1032 and 1033. The denial of the claim by WICI was broughtby PTEC to the attention of the Insurance Commissioner by means of a letter dated 21 March 1964.

This is a fact admitted by an official of WICI, Juan Jose Camacho, in charge of issuingcover notes of WICI. At any rate, it is not disputed that PTEC paid in full all the premiums as called for by thestatement issued by WICI after the issuance of the two regular marine insurance policies, thereby leaving noaccount unpaid by PTEC due on the insurance coverage, which must be deemed to include the Cover Note. If the Note is to be treated as a separate policy instead of integrating it to the regular policies subsequentlyissued, the purpose and function of the Cover Note would be set at naught or rendered meaningless, for it is ina real sense a contract, not a mere application for insurance which is a mere offer. It may be true that themarine insurance policies issued were for logs no longer including those which had been lost during loadingoperations. This had to be so because the risk insured against is not for loss during loading operationsanymore, but for loss during transit, the logs having already been safely placed aboard. This would make nodifference, however, insofar as the liability on the cover note is concerned, for the number or volume of logslost can be determined independently, as in fact it had been so ascertained at the instance of WICI itself whenit sent its own adjuster to investigate and assess the loss, after the issuance of the marine insurance policies. The adjuster went as far as submitting his report to WICI, as well as its computation of WICI's liability on theinsurance coverage. This coverage could not have been no other than what was stipulated in the Cover Note,for no loss or damage had to be assessed on the coverage arising from the marine insurance policies. Forobvious reasons, it was not necessary to ask PTEC to pay premium on the Cover Note, for the loss insuredagainst having already occurred, the more practical procedure is simply to deduct the premium from theamount due PTEC on the Cover Note. The non-payment of premium on the Cover Note is, therefore, no causefor PTEC to lose what is due it as if there had been payment of premium, for non-payment by it was notchargeable against its fault. Had all the logs been lost during the loading operations, but after the issuance ofthe Cover Note, liability on the note would have already arisen even before payment of premium. This is howthe cover note as a "binder" should legally operate; otherwise, it would serve no practical purpose in the realmof commerce, and is supported by the doctrine that where a policy is delivered without requiring payment ofthe premium, the presumption is that a credit was intended and policy is valid DOUBLE INSURANCE Sta. Ana v. Commercial Union Assurance 55 Phil 329 November 20, 1930 FACTS: In the year 1923, Ulpiano Sta. Ana built a house of strong materials with a galvanized iron roof in Pasig On the 1st of October, 1925, the plaintiff Ulpiano Santa Ana took out a fire insurance policy on the house in the Phoenix Assurance Company, and a policy in the Guardian Assurance Company, Limited, for a period of one year from that

In a replyletter dated 30 March 1964, Insurance Commissioner Francisco Y. Mandanas observed that it is only fair andequitable to indemnify the insured under Cover Note 1010, and advised early settlement of the said marineloss and salvage claim. On 26 June 1964, WICI informed the Insurance Commissioner that, on advice of theirattorneys, the claim of PTEC is being denied on the ground that the cover note is null and void for lack ofvaluable consideration. The Court of First Instance of Manila ruled in favor of PTEC and against WICI whichordered the latter to pay the sum of P11,042.04 with interest at the rate of 12% interest from receipt of noticeof loss on 15 April 1963 up to the complete payment, the sum of P3,000.00 as attorney's fees and the costs.The Court of Appeals, however, reversed the decision of the trial court and thus dismissed PTEC's complaint

Issue: Whether the Cover Note is without consideration, is null and void, and thus recovery cannot be madethereon. Held: NO. The Cover Note was not without consideration. The fact that no separate premium was paid on theCover Note before the loss insured against occurred, does not militate against the validit y of PTEC'scontention, for no such premium could have been paid, since by the nature of the Cover Note, it did notcontain, as all Cover Notes do not contain particulars of the shipment that would serve as basis for thecomputation of the premiums. As a logical consequence, no separate premiums are intended or required to bepaid on a Cover Note.

date until 4 o'clock in the afternoon of October 1, 1926, paying the respective premiums of P97.50 and P196 to said companies through their duly authorized Philippine agent, Kerr & Company.

It appears that no other insurance should be admitted upon the property thereby assured without the consent of companies (Phoenix Assurance Co., Ltd., and the Guardian Assurance Company, the Globe and Rutgers Fire Insurance Company of New York, and the Commercial Union, Company) duly given by endorsement o The first two policies were taken out on one and the same date, namely, October 1st, and the last two likewise upon one and the same date, that is, December 16, 1925, the insured plaintiff, Ulpiano Sta. Ana, has not stated in the last two policies that his property had previously been insured with the Phoenix and the Guardian Assurance Company, and still less in the insurance policy of the "Compania Filipinas" taken out on September 20 of the following year, 1926, nor has he obtained upon the first two policies the necessary endorsements for the three subsequent insurance policies.

On November 19, 1925, the plaintiff Ulpiano Santa Ana mortgaged said house to the plaintiff Rafael Garcia for a period of two years, the contract being drawn up as a retro sale, and the policies issued by the Phoenix Assurance Company and the Guardian Assurance Company, Limited, were endorsed to the mortgagee On December 16, 1925, the plaintiff Urpiano Santa Ana reinsured said house with the defendant companies, the Globe and Rutgers Fire Insurance Company of New York, and the Commercial Union Assurance Company, Limited of London, through their common agent duly authorized to represent them in the Philippine Islands, the Pacific Commercial Company, which was to be effective for one year from the aforementioned date until 4 o'clock in the afternoon of December 16, 1926. On September 20, 1926, Ulpiano Santa Ana took out another insurance policy on the house in question in the "Filipinas, Compania de Seguros, which issued the one-year policy About 3 o'clock in the morning of October 1, 1926, that is, twelve hours before the expiration of the policies issued by the Phoenix Assurance Company and the Guardian Assurance Company, Limited for P3,000 and P6,000 respectively, a fire broke out in the insured house, where Ulpiano Santa Ana and his family lived, starting in the ceiling of the living room where the plaintiff and his family were at that time sleeping, consuming the dwelling and every combustible object within, including jewelry and clothing. Ulpiano Santa Ana gave notice in due time of the loss to each and every one of the companies in which he had insured the house and demanded payment of the respective policies; the assurance companies refused payment on the ground that the claim of P21,000 filed by him was fraudulent, being in excess of the real value of the insured property; that none of said companies had been informed of the existence of the other policies in the other companies, and that the fire was intentional. Ulpiano Santa Ana therefore brought the actions which gave rise to these cases.

It should be noted that clause three of the "Filipinas" policy drawn up in Spanish, and the english policies issued by the four other companies, provided that any outstanding insurance upon the whole or a portion of the objects thereby assured must be declared by the insured in writing and he must cause the company to add or insert it in the policy, without which such policy shall be null and avoid, and the insured will not be entitled to indemnity in case of loss. Ulpiano Santa Ana maintains that he gave the required notice to all the insurance companies, telling them he had paid for other insurance on the same property. o o To Kerr & Company through their sub-agent, Mariano Morelos; To the Pacific Commercial Company through their employee, Guillermo de Leon; and To the "Filipinas, Compania de Seguros" through their agent, Juan Grey;

But he has been contradicted in this by all the persons mentioned This deprives his allegations of probative force, especially considering that such advises or notices, so basic and essential to the existence and validity of the policies, must be given in writing as required in the noted attached to the four policies above mentioned, and must be endorsed upon each of them So that in case of necessity, as in the instant one, when a loss occurs, the insured may clearly show that he has fulfilled this indispensable requisite In the absolute absence of such notice when it is one of the conditions specified in the fire insurance policy, the policy is null and void.

ISSUE: Whether or not Petitioner has the right to collect the insurance upon his property from the insurance companies HELD: No

UNION MANUFACTURING CO INC and the REPUBLIC BANK vs PHILIPPINE GUARANTY CO., INC FACTS: Union Manufacturing Co., Inc. obtained certain loans, overdrafts and other credit accommodations from the Republic Bank in the total sum of P415,000.00 with interest at 9% per annum from said date and to secure the payment, said Union Manufacturing Co., Inc. executed a real and chattel mortgages on certain properties, which are more particularly described and listed at the back of the mortgage contract. As an additional condition of the mortgage contract, the Union Manufacturing Co., Inc. undertook to secure insurance coverage over the mortgaged properties for the same amount of P415,000.00 Union Manufacturing Co., Inc. failed to secure insurance coverage on the mortgaged properties since January 12, 1962, despite the fact that its general manager, was reminded of said requirement. o the Republic Bank procured from the defendant, Philippine Guaranty Co., Inc. an insurance coverage on loss against fire for P500,000.00 over the properties of the Union Manufacturing Co., Inc., as described in defendant's 'Cover Note' with the annotation that loss or damage, if any, under said Cover Note is payable to Republic Bank as its interest may appear, subject however to the printed conditions of said defendant's Fire Insurance Policy Form;

Sincere Insurance for P25,000.00 and Manila Insurance for P200,000.00 with the result that these insurances, of which insurance company became aware of only after the fire, were not endorsed on our policy b. Policy Condition No. 11 was not complied with because Union have failed to give to the representatives the required documents and other proofs with respect to Unions claim and matters touching on liability, if any, and the amount of such liability'; That when defendant Philippine Guaranty Co., issued Fire Insurance in the sum of P500,000.00 to cover the properties of the Union Manufacturing Co., Inc., the same properties were already covered by a fire insurance policy of the Sincere Insurance Company, Oceanic Insurance Agency, New India Assurance Co., Ltd.,

ISSUE: Whether or not Republic Bank can recover the proceeds being the one who applied for the insurance policy. HELD: No. RATIO: Why the appellant Republic Bank could not recover, as payee, in case of loss as its "interest may appear subject to the terms and conditions, clauses and warranties" of the policy Inasmuch as the Union Manufacturing Co., Inc. has violated the condition of the policy to the effect that it did not reveal the existence of other insurance policies over the same properties, as required by the warranty appearing on the face of the policy issued by the defendant and that on the other hand said Union Manufacturing Co., Inc. represented that there were no other insurance policies at the time of the issuance of said defendant's policy, and it appearing furthermore that while the policy of the defendant was in full force and effect the Union Manufacturing Co., Inc. secured other fire insurance policies without the written consent of the defendant endorsed on the policy, the conclusion is inevitable that both the Republic Bank and Union Manufacturing Co., Inc. cannot recover from the same policy of the defendant because the same is null and void." CASES MENTIONED: Just in case In Santa Ana v. Commercial Union Assurance Co , penned by Justice Villa-Real: "Without deciding whether notice of other insurance upon the same property must be given in writing, or whether a verbal notice is sufficient to render an insurance valid which requires such notice, whether oral or written, we hold that in the absolute absence of such notice when it is one of the conditions specified in the fire insurance policy, the policy is null and void." In Ang Giok Chip v. Springfield Fire & Marine Ins. Co. , the conformity of the insured to the terms of the policy, implied from the failure to express any disagreement with what is provided for, was stressed in these words of the ponente, Justice Malcolm: "It is admitted that the policy before us was accepted by the plaintiff. The receipt of this policy by the

Fire insurance policy was issued Policy expired, and was renewed. In the corresponding voucher ..., it appears that although said renewal premium was paid by the Republic Bank, such payment was for the account of Union Manufacturing Co., Inc. and that the cash voucher for the payment of the first premium was paid also by the Republic Bank but for the account Union Manufacturing Co., Inc .; A fire occurred in the premises of the Union Manufacturing Co., Inc Union Manufacturing Co., Inc. filed its fire claim with the defendant Philippine Guaranty Co., Inc., thru its adjuster, H. H. Bayne Adjustment Co., o DENIED. a. Policy Condition No. 3 and/or the 'Other Insurance Clause' of the policy violated because Union did not give notice other insurance taken from New India for P80,000.00,

insured without objection binds both the acceptor and the insured to the terms thereof. The insured may not thereafter be heard to say that he did not read the policy or know its terms, since it is his duty to read his policy and it will be assumed that he did so." In Young v. Midland Textile Insurance Company , (1915) it was categorically set forth that as a condition precedent to the right of recovery , there must be compliance on the part of the insured with the terms of the policy . Justice Johnson: "If the insured has violated or failed to perform the conditions of the contract, and such a violation or want of performance has not been waived by the insurer, then the insured cannot recover. Courts are not permitted to make contracts for the parties. The function and duty of the courts consist simply in enforcing and carrying out the contracts actually made. While it is true, as a general rule, that contracts of insurance are construed most favorably to the insured, yet contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties themselves have used. If such terms are clear and unambiguous they must be taken and understood in their plain, ordinary and popular sense." 11 More specifically, there was a reiteration of this Santa Ana ruling in a decision by the then Justice, later Chief Justice, Bengzon, in General Insurance & Surety Corp. v. Ng Hua. 12 Thus: "The annotation then, must be deemed to be a warranty that the property was not insured by any other policy. Violation thereof entitles the insurer to rescind. (Sec. 69, Insurance Act) Such misrepresentation is fatal in the light of our views in Santa Ana v. Commercial Union Assurance Company, Ltd. ... . The materiality of non-disclosure of other insurance policies is not open to doubt." As a matter of fact, in a 1966 decision, Misamis Lumber Corp. v. Capital Ins. & Surety Co., Inc., Justice J.B.L. Reyes, for this Court, made manifest anew its adherence to such a principle in the face of an assertion that thereby a highly unfavorable provision for the insured would be accorded recognition. "The insurance contract may be rather onerous ('one sided', as the lower court put it), but that in itself does not justify the abrogation of its express terms, terms which the insured accepted or adhered to and which is the law between the contracting parties."

- On Aug 29, 1962, the parties executed an endorsement declaring Great American and Northwest as co-insurers - Sept 26, 1962, Yap took another Fire insurance policy for P20,000 from Federal Insurance without notice and consent of petitioner - On Dec 19, 1962, fire broke out of respondent's building - Respondent filed an insurance claim from petitioner but denied on the ground of breach or violation of any terms and conditions in the policy - petitioner alleged that Yap took out an insurance from another insurance company without their knowledge and endorsement in violation of their express stipulation - TC and CA ruled in favor of Yap ISSUE: WoN petitioner should be absolved from liability on account of violation by respondent of the co-insurance clause? RULING: (YES) - According to CA, the Great American Insurance policy was substituted by the Federal Insurance Policy which is erroneous because if it was mere substitution, there was no need for endorsement. If there was a substitution, it was between Great American and Northwest - The endorsement shows clear intention of the parties to recognize the existence of only one co-insurance - CA would consider petitioner to have waived the formal requirement of endorsing since there was absolutely no showing that it was not aware of said substitution and preferred to continue the policy. "If, with the knowledge of the existence of other insurances which the defendant deemed violations of the contract, it has preferred to continue the policy, its action amounts to a waiver of the annulment of the contract ..." (Gonzales La O case) which is also erroneous - By the plain terms of the policy, other insurance without the consent of petitioner would ipso facto avoid the contract - The validity of a clause in a fire insurance policy to the effect that the procurement of additional insurance without the consent of the insurer renders ipso facto the policy void is well-settled: Where a policy contains a clause providing that the policy shall be void if insured has or shall procure any other insurance on the property, the procurement of additional insurance without the consent of the insurer avoids the policy." (Planters' Mut. Ins. Ass'n) The policy provided that it should be void in case of other insurance "without notice and consent of this company. ..." It also authorized the company to terminate the contract at any time, at its option, by giving notice and refunding a ratable proportion of the premium. Held, that additional insurance, unless consented to, or unless a waiver was shown, ipso facto avoided the contract, and the fact that the company had not, after notice of such insurance, cancelled the policy, did not justify the legal conclusion that it had elected to allow it to continue in force." (Johnson vs. American Fire Ins., Co - The obvious purpose of the requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. - The public, as well as the insurer, is interested in preventing the situation in which a fire would be profitable to the insured. - According to Justice Story: "The insured has no right to complain, for he assents to comply with all the stipulation on his side, in order to entitle himself to the benefit of the contract, which, upon reason or principle, he has no right to ask the court to dispense with the performance of his own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulation would not have been entered into."

Pioneer Insurance vs Yap TOPIC: Double Insurance ______________________________________________________________ FACTS: - Respondent Yap was the owner of a 2 storey building in Manila where she sold shopping bags and footwear. Yap's son-in-law was in charge of the store - On April 19, 1962, Yap took out Fire Insurance Policy from Petitioner Pioneer Insurance with a face value of P25,00 covering her stocks, office furniture, fixtures and fittings of every kind - Among their conditions in the policy were: (1) Insured shall give notice to the Company of any insurance already effected or which may subsequently be effected unless such notice be endorsed on this policy on behalf of the company before the occurrence of any loss; (2) It is understood that, except as may be stated on the face of this policy there is no other insurance on the property hereby covered and no other insurance is allowed except by the consent of the Company endorsed hereon. Any false declaration or breach or this condition will render this policy null and void - On April 19, 1962, an insurance policy (P20,000) was also issued by Great American Insurance covering the same properties

Geagonia v. Court of Appeals Facts: Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1 year policy and covered thestock trading of dry goods. The policy noted the requirement that o "3. The insured shall give notice to the Company of any insurance or insurances already effected, or which may subsequently be effected, covering any of the property or properties consisting of stocks in trade, goods in process and/or inventories only hereby insured, and unless notice be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this policy shall be deemed forfeited, provided however, that this condition shall not apply when the total insurance orinsurances in force at the time of the loss or damage is not more than P200,000.00." The petitioners stocks were destroyed by fire. He then filed a claim which was subsequently denied because the petitioners stocks were covered by two other fire insurance policies for Php 200,000 issued by PFIC. The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy. Geagonia then filed a complaint against the private respondent in the Insurance Commission forthe recovery of P100,000.00 under fire insurance policy and damages. He claimed that he knew the existence of the other two policies. But, he said that he had no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies and this requirement was not mentioned to him by the private respondent's agent. The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the two fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o informing him or securing his consent; and that Cebu Tesing Textile, as his creditor, had insurable interest on the stocks. The Insurance Commission then ordered the respondent company to pay complainant the sum of P100,000.00 with interest and attorneys fees. CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the existence of the two other policies issued by the PFIC.

Issue: Ruling: The SC agree with the Court of Appeals that the petitioner knew of the prior policies issued by the PFIC. His letter of 18 January 1991 to the private respondent conclusively proves this knowledge. However, in order to constitute a violation, the other insurance must be upon same subject matter, the same interest therein, and the same risk. As to a mortgaged property, the mortgagor and the mortgagee have each an independent insurable interest therein and both interests may be one policy, or each may take out a separate policy covering his interest, either at the same or at separate times. The mortgagor's insurable interest covers the full value of the mortgaged property, even though the mortgage debt is equivalent to the full value of the property. The mortgagee's insurable interest is to the extent of the debt, since the property is relied upon as security thereof, and in insuring he is not insuring the property but his interest or lien thereon. His insurable interest is prima facie the value mortgaged and extends only to the amount of the debt, not exceeding the value of the mortgaged property. Thus, separate insurances covering different insurable interests may be obtained by the mortgagor and the mortgagee. The first conclusion is supported by the portion of the condition referring to other insurance "covering any of the property or properties consisting of stocks in trade, goods in process and/or inventories only hereby insured," and the portion regarding the insured's declaration on the subheading CO-INSURANCE that the co-insurer is Mercantile Insurance Co., Inc. in the sum of P50,000.00. A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and interest. The insurable interests of a mortgagor and a mortgagee on the mortgaged property are distinct and separate. Since the two policies of the PFIC do not cover the same interest as that covered by the policy of the private respondent, no double insurance exists. The non-disclosure then of the former policies was not fatal to the petitioner's right to recover on the private respondent's policy. By stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200,000.00. What it had in mind was to discourage over-insurance. The rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value, the insured may have an inducement to destroy the property for the purpose of collecting the insurance. The public as Whether or not the respondent can recover from the insurer?

well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured.