G.R. No. 14373. January 30, 1960
GENERAL INSURANCE & SURETY CORPORATION, PETITIONER, VS. NG HUA, RESPONDENT.
BENGZON, J.:
several defenses in the Manila court of first instance. After trial, it
was required to pay.
On appeal to the Court of Appeals, the judgment was affirmed.
This is now a revision on certiorari, upon the insurer’s insistence
on two of its main defenses: prescription and breach of warranty.
The principal facts on which adjudication may rest are these:
On April 15, 1952, the defendant General Insurance & Surety
Corporation issued its Insurance Policy No. 471, insuring against fire,
for one year, the stock in trade of the Central Pomade Factory owned by
Ng Hua, the insured. The next day, the Pomade Factory building burned,
resulting in destruction by fire of the insured properties. Ng Hua
claimed indemnity from the insurer. The policy covered damages up to
P10,000.00; but after some negotiations and upon suggestion of the
Manila Adjustment Company, he reduced the claim to P5,000.00.
Nevertheless, the defendant insurer refused to pay for various reasons,
namely (a) action was not filed in time; (b) violation of warranty; (c)
submission of fraudulent claim; and (d) failure to pay the premium.
The aforesaid Policy No. 471 contains this stipulation printed on the back thereof;
“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 hereby insured, and unless
such notice be given and the particulars of such insurance or
insurances be stated in or endorsed on this Policy by or on
behalf of the Company before the occurrence of any loss or damage, all
benefits under this Policy shall be forfeited.” (Italics Ours.)
The face of the policy bore the annotation: “Co-Insurance Declared—NIL”
It is undenied that Ng Hua had obtained fire insurance on the same
goods, for the same period of time, in the amount of P20,000.00 from
General Indemnity Co. However, the Court of Appeals, referring to the
annotation and overruling the defense, held there was no violation of
the above clause, inasmuch as “co-insurance exists when a condition of
the policy requires the insured to bear ratable proportion of
the loss when the value of the insured property exceeds the face value
of the policy,” hence there is no co-insurance here.
Discussion—Undoubtedly, co-insurance exists under the
condition described by the appellate court but that is one kind of
co-insurance. It is not the only situation where coinsurance
exists. Other insurers of the same property against the same hazard are
sometimes referred to as co-insurers and the ensuing combination as
co-insurance.[1] And
considering the terms of the policy which required the insured to
declare other insurances, the statement in question must be deemed to
be a statement (warranty) binding on both insurer and insured, that
there were no other insurance on the property. Remember it runs
“Co-Insurance declared“; emphasis on the last word. If
“Co-insurance” means what the Court of Appeals says, the annotation
served no purpose. It would even be contrary to the policy itself, which in its clause No. 17 made the insured a co-insurer for the excess of the value of the property over the amount of the policy.
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 vs.
Commercial Union Assurance Company, Ltd., 55 Phil. 329. The materiality
of non-disclosure of other insurance policies is not open to doubt.
Furthermore, even if the annotation were overlooked, the defendant
insurer would still be free from liability because there is no question
that the policy issued by General Indemnity has not been stated in nor endorsed on
Policy No. 471 of defendant. And as stipulated in the above-quoted
provisions of such policy “all benefit under this policy shall be
forfeited.”[2]
To avoid the disastrous effect of the misrepresentation or
concealment of the other insurance policy, Ng Hua alleges “actual
knowledge” on the part of General Insurance of the fact that he had
taken out additional insurance with General Indemnity. He does not say when such knowledge was acquired or imparted. If General Insurance knew before issuing its policy or before the fire, such knowledge might overcome the insurer’s defense.[3]
However, the Court of Appeals found no evidence of such knowledge. We
have read the pages of the stenographic notes cited by Ng Hua and all
we gather is evidence of the existence of the insurance with General
Indemnity Company. As to knowledge of General Insurance before issuance
of its policy or the fire, there was none.
Indeed, this concealment and violation was expressly set up as a
special defense in the answer. Yet plaintiff did not, in avoidance,
reply nor assert such knowledge. And it is doubtful whether evidence on
the point would be admissible under the pleadings. (See Rule 11, sec.
1.)
All the above considerations lead to the conclusion that the
defendant insurer successfully established its defense of warranty
breach or concealment of the other insurance and/or violation of the
provision of the policy above-mentioned.
Having reached this conclusion, we deem it unnecessary to discuss the other defenses.
Wherefore, the judgment under review will be revoked, and the
defendant insurer (herein petitioner) acquitted from all the liability
under the policy. Costs against respondent. So ordered.
Paras, C. J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, and Barrera, JJ., concur.
Gutierrez David, J., took no part.
[1] Where the same person is insured by several insurers separately in respect to the same subject and interest, there is double insurance
under our statute (sec. 86, Insurance Law). The situation is also
sometimes described in the texts and cases as concurrent insurance,
additional or other insurance, or coinsurance. See Ocean S. S. Co. vs. Aetna Ins. Co., 121 Federal Reporter, 882, 887, Fidelity & Casualty Co. vs.
Firemen’s Fund, 100 Pac. (2nd series) 364, 366. Textbooks and treatises
in their indexes, list additional insurance, other insurance, and
concurrent insurance under “co-insurance.” See Vance on Insurance;
Couch, Cyclopedia on Insurance); Appelman-Law on Insurance. See
specially Vance on Insurance 2nd Ed. p. 78 j Oppenheim vs. Firemen’s Fund, 138 NW. 777 referred to special conditions in Minnesota.
[2] A policy may declare that a violation of specified provisions thereof shall avoid it. (sec. 70, Insurance Law).
[3] La O vs. Yek Tong Lim Fire & Marine Insurance Co. 55 Phil., 386.