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    311 Phil 152

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    Diane ヂエン
    This document summarizes an insurance dispute case between an insured and an insurance company. The insured's store was completely destroyed in a fire. The insurance company denied the claim, arguing the insured violated his policy conditions by not disclosing that he had additional fire insurance policies from another company. The court ruled that the insured did not violate the conditions. It found the conditions were ambiguous and only prohibited double insurance exceeding PHP 200,000. Since the total insurance was below the actual value and the other policies insured different interests, there was no double insurance violation.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    311 Phil 152

    Uploaded by

    Diane ヂエン
    37 views4 pages
    This document summarizes an insurance dispute case between an insured and an insurance company. The insured's store was completely destroyed in a fire. The insurance company denied the claim, arguing the insured violated his policy conditions by not disclosing that he had additional fire insurance policies from another company. The court ruled that the insured did not violate the conditions. It found the conditions were ambiguous and only prohibited double insurance exceeding PHP 200,000. Since the total insurance was below the actual value and the other policies insured different interests, there was no double insurance violation.

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    311 PHIL 152

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    This document summarizes an insurance dispute case between an insured and an insurance company. The insured's store was completely destroyed in a fire. The insurance company denied the claim, arguing the insured violated his policy conditions by not disclosing that he had additional fire insurance policies from another company. The court ruled that the insured did not violate the conditions. It found the conditions were ambiguous and only prohibited double insurance exceeding PHP 200,000. Since the total insurance was below the actual value and the other policies insured different interests, there was no double insurance violation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    37 views4 pages

    311 Phil 152

    Uploaded by

    Diane ヂエン
    This document summarizes an insurance dispute case between an insured and an insurance company. The insured's store was completely destroyed in a fire. The insurance company denied the claim, arguing the insured violated his policy conditions by not disclosing that he had additional fire insurance policies from another company. The court ruled that the insured did not violate the conditions. It found the conditions were ambiguous and only prohibited double insurance exceeding PHP 200,000. Since the total insurance was below the actual value and the other policies insured different interests, there was no double insurance violation.

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    You are on page 1of 4

    311 PHIL 152-169

    FACTS: The petitioner is the owner of Norman’s Mart located in the public market of
    San Francisco, Agusan del Sur. On 22 December 1989, he obtained from the private
    respondent fire insurance policy No. F-14622 for P100,000.00. The period of the policy
    was from 22 December 1989 to 22 December 1990 and covered the following: “Stock-
    in-trade consisting principally of dry goods such as RTW’s for men and women wear
    and other usual to assured’s business.”

    The petitioner declared in the policy under the subheading entitled CO-INSURANCE
    that Mercantile Insurance Co., Inc. was the co-insurer for P50,000.00. From 1989 to
    1990, the petitioner had in his inventory stocks amounting to P392,130.50, itemized as
    follows:

    Zenco Sales, Inc. P55,698.00

    F. Legaspi Gen. Merchandise 86,432.50

    Cebu Tesing Textiles 250,000.00 (on credit)

      ========

      P392,130.50

    The policy contained the following condition:

    “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

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    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 theInsurance


    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 or insurances in force at the
    time of the loss or damage is not

    more than P200,000.00.”

    On 27 May 1990, fire of accidental origin broke out at around 7:30 p.m. at the public
    market of San Francisco, Agusan del Sur. The petitioner’s insured stocks-in-trade were
    completely destroyed prompting him to file with the private respondent a claim under the
    policy. On 28 December 1990, the private respondent denied the claim because it found
    that at the time of the loss the petitioner’s stocks-in-trade were likewise covered by fire
    insurance policies No. GA-28146 and No. GA-28144, for P100,000.00 each, issued by
    the Cebu Branch of the Philippines First Insurance Co., Inc. (hereinafter PFIC). These
    policies indicate that the insured was “Messrs. Discount Mart (Mr. Armando Geagonia,
    Prop.)” with a mortgage clause reading:

    “MORTGAGEE: Loss, if any, shall be payable to Messrs.

      Cebu Tesing Textiles, Cebu City as their

      interest may appear subject to the terms of

      this policy. CO-INSURANCE DECLARED:

      P100,000. — Phils. First CEB/F-24758″

    The basis of the private respondent’s denial was the petitioner’s alleged violation of
    Condition 3 of the policy.

    The petitioner then filed a complaint against the private respondent with the Insurance
    Commission (Case No. 3340) for the recovery of P100,000.00 under fire insurance
    policy No. F-14622 and for attorney’s fees and costs of litigation. He attached as Annex
    “M” thereof his letter of 18 January 1991 which asked for the reconsideration of the
    denial. He admitted in the said letter that at the time he obtained the private
    respondent’s fire insurance policy he knew that the two policies issued by the PFIC
    were already in existence; however, he had no knowledge of the provision in the private
    respondent’s policy requiring him to inform it of the prior policies; this requirement was
    not mentioned to him by the private respondent’s agent; and had it been so mentioned,
    he would not have withheld such information. He further asserted that the total of the
    amounts claimed under the three policies was below the actual value of his stocks at
    the time of loss, which was P1,000,000.00

    In its answer, the private respondent specifically denied the allegations in the complaint
    and set up as its principal defense the violation of Condition 3 of the policy.

    ISSUE: WON THE INSURED VIOLATED THE PROVISION OF THE INSURANCE


    POLICY.

    HELD: NO. We are of the opinion that Condition 3 of the subject policy is not totally free
    from ambiguity and must, perforce, be meticulously analyzed. Such analysis leads us to
    conclude that (a) the prohibition applies only to double insurance, and (b) the nullity of
    the policy shall only be to the extent exceeding P200,000.00 of the total policies
    obtained. 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. As earlier stated, 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.
    Furthermore, 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
    to P200,000.00. What it had in mind was to discourage over-insurance. Indeed, 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 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 well as the insurer is interested in
    preventing a situation in which a fire would be profitable to the insured.

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