SHARRUF & CO., KNOWN ALSO AS SHARRUF & ESKENAZI, SALOMON SHARRUF AND ELIAS ESKENAZI, PLAINTIFFS AND APPELLEES, VS. BALOISE FIRE INSURANCE CO., SUN INSURANCE OFFICE, LTD., AND SP…

This is an appeal taken by the defendant
companies Baloise Fire Insurance Co., Sun Insurance Office Ltd., and
Springfield Insurance Co., represented by Kuenzle & Streiff, Inc.,
from the judgment of the Court of First Instance of Manila, the
dispositive part of which reads as follows:

“Wherefore, judgment is rendered ordering the
defendant insurance companies to pay to the plaintiffs Salomon Sharruf
and Elias Eskenazi the total amount of P40,000 plus interest thereon at
8 per cent per annum from the date of the filing of the complaint, with
the costs of the trial. The defendants shall pay this judgment jointly
in proportion to the respective policies issued by them. The plaintiffs
Salomon Sharruf and Elias Eskenazi shall recover the judgment share and
share alike, deducting from the portion of the plaintiff Elias Eskenazi
the sum of P3,000 which belongs and shall be turned over to the
intervenor E. Awad & Co., Inc. It is so ordered.”

In support of their appeal the appellants assign the following alleged
errors as committed by the court a quo in its decision in question, to
wit:

“1. The lower court erred in holding,
that Salomon Sharruf and Elias Eskenazi had personality to sue, either
as a partnership or individually, and therefore, an insurable interest.

“2. The lower court erred in holding, that the fire that broke out in
the premises at Nos. 299-301 Muelle de la Iridustria of this city,
occupied by the alleged plaintiffs, was not of incendiary origin.

“3. The lower court erred in holding, that the ‘idea of using petroleum
in the fire in question, surged after the fire for the purpose of
making it appear as a part of the evidence.’

“4. The lower
court erred in holding, that the claim of loss filed by the alleged
plaintiffs was not fraudulent, but merely inaccurate, due to the
peculiar circumstances of the case, such as the loss of invoices and
sales-slips.

“5. The lower court erred in sentencing the defendants to pay jointly
to the alleged plaintiffs the sum of P40, 000, with interest thereon at
the rate of 8 per cent per year and costs.

“6. The lower court erred in overruling defendants’ motion for new
trial and in failing to dismiss the case altogether, with costs against
the alleged plaintiffs.”

The preponderance of the evidence shows the existence of the following facts:

In the months of June and July, 1933, the plaintiffs Salomon
Sharruf and Elias Eskenazi were doing business under the firm name of
Sharruf & Co. As they had applied to the defendant companies for
insurance of the merchandise they had in stock, the latter sent their
representative P. E. Schiess to examine and assess it. On July 25,
1933, the defendant insurance companies” issued insurance policies
Exhibits D, E, and F in the total amount of P25,000 in the name of
Sharruf & Co. On August 15, 1933, the defendant Springfield
Insurance Co. issued an additional policy (Exhibit G) in the sum of
P15,000 in favor of said firm Sharruf & Co., raising the total
amount of the insurance on said merchandise to P40,000. On August 26,
1933, the plaintiffs executed a contract of partnership between
themselves (Exhibit A) wherein they substituted the name of Sharruf
& Co. with that of Sharruf & Eskenazi, stating that Elias
Eskenazi contributed to the partnership, as his capital, goods valued
at P26,299.94 listed in an inventory Exhibit B. It was likewise stated
in said contract that Salomon Sharruf brought to said partnership, as
his capital, goods valued at P24,205.10, appearing in the inventories
Exhibits C and C-l. The total value of the merchandise contributed by
both partners amounted to P50,505.04. Part of said merchandise, most of
which were textiles, was sold for P8,000, leaving goods worth P43,000.
In all there were from 60 to 70 bolts of silk. All the goods, most of
which were aluminum kitchen utensils, various porcelain and glass
wares, and other articles of stucco, were contained in about 39 or 40
cases. The last time the plaintiffs were in the building was on
September 19,1933, at 4 o’clock in the afternoon. Up to the month of
September 1933, about 30 or 40 cases of merchandise belonging to the
plaintiffs were in Robles’ garage at No. 1012 Mabini Street.

At about 12.41 o’clock on the morning of September 22, 1933, the
fire alarm bell rang in the different fire stations of the city. The
firemen of the San Nicolas Fire Station, headed by Captain Charles A.
Baker, were the first to arrive at the scene of the fire, followed by
Captain Thomas F. Mclntyre of the Santa Cruz Fire Station, who arrived
at 12.44 o’clock. Having found the door at No. 301, Muelle de la
Industria Street, where the building was in flames, locked, the firemen
pumped water on the upper part of the building and later broke open the
door through which they entered the premises. They then saw an inflamed
liquid flowing towards the sidewalk, the flames thereon blazing more
intensely every time water fell on them. The liquid apparently came
from under the staircase of said floor. They likewise noted that the
entire space occupied by the staircase was in flames except the
adjoining room. After the fire had been extinguished, an earthen pot
(Exhibit 15) containing ashes and the residue of a certain substance,
all of which smelled of petroleum, was found by detective Manalo near
the railing of the stairway of the second floor. At about 8.30 o’clock
that same morning, detective Irada found nother earthen pot (Exhibit
16), one-fourth full of water that smelled of petroleum, under the
staircase of the first floor; straw and excelsior, that also smelled of
petroleum, around said pot, a red rag (Exhibit 18) in front of the
toilet, and a towel which also smelled of petroleum on the garbage,
rags and other things stuffed into the petroleum can, Exhibit 21. On
the following day, September 23, 1933, photographs were taken of the
condition of the different parts of the building and of the goods found
therein. Said photographs are: Exhibit 1, showing the interior of the
first floor partially burned, with the staircase, the doorway, the
wooden partition wall and pieces of wood scattered on the floor
supposed to be from the door that was demolished; Exhibit 2, showing
about 8 or 9 scorched cases, some closed and others open; Exhibit 3,
showing the space or hall of the upper floor partially damaged by the
fire at the place occupied by the staircase, with chairs piled up and
unburnt, pieces of wood and debris apparently from the cement partition
wall beside the staircase and the attic; Exhibit 4, showing the same
space taken from another angle, with the partition wall of cement and
stone and some broken railings of the stairway; Exhibit 5, showing a
room with partially burnt partition wall, with a wardrobe and a table
in the background, another table in the center, a showcase near the
wall with porcelain and iron articles on top thereof and fallen and
burnt window shutters on the floor; Exhibit 6, showing an open unburnt
showcase containing necklaces with imitation stones and other jewelry;
Exhibit 7, showing piled up chairs and boxes and the burned and
destroyed upper part of the partition wall and attic; Exhibit 8,
presenting a showcase with a burnt top, containing kitchen utensils,
tableware, dinner pails and other articles; Exhibit 9, presenting a
half-open trunk with protruding ends of cloth, other pieces of cloth
scattered on the floor, a step of the staircase and a bench; Exhibit
10, showing the partially destroyed attic and wires wound around the
beams; Exhibit 11, presenting another view of the same attic from
another angle. On the 27th of said month and year, the following
photographs were taken: Exhibit 12, presenting a close-up of the beams
and electric wires in the same attic shown in Exhibit 10; Exhibit 13,
presenting a close-up of the wires found in the attic, with an electric
bulb hanging from a beam, and the burnt beams; and Exhibit 14, showing
Nos. 14 and 18 wires entwined with one another on the first floor, with
the burnt posts and partition walls. Electrical Engineer Joseph Mora,
who inspected the electric wiring on September 25, 1933, was of the
opinion that the wires wound around the beam and a nail might have
caused the fire, but he could not assure whether any of the wires was
burned due to an electrical discharge that passed through it, or
whether or not the fire started from the lighting system. In the burned
building the plaintiffs kept petroleum used for cleaning the floor.

The first question to be decided in the present appeal, which is
raised in the first assignment of alleged error, is whether or not
Salomon Sharruf and Elias Eskenazi had juridical personality to bring
this action, either individually or collectively, and whether or not
they had insurable interest’.

As already seen, Salomon Sharruf and Elias Eskenazi were doing
business under the firm name of Sharruf & Co. in whose name the
insurance policies were issued, Elias Eskenazi having paid the
corresponding premiums.

In the case of Lim Cuan Sy vs. Northern Assurance Co. (55 Phil., 248), this court said:

“A policy insuring merchandise against fire is not
invalidated by the fact that the name of the insured in the policy is
incorrectly written ‘Lim Cuan Sy’ instead of ‘Lim Cuan Sy & Co.’,
the latter being the proper legal designation of the firm, where it
appears that the designation fLim Cuan Sy’ was commonly used as the
name of the firm in its business dealings and that the error in the
designation of the insured in the policy was not due to any fraudulent
intent on the part of the latter and did not mislead the insurer as to
the extent of the liability assumed.”

In the present case, (while it is true that at the beginning the
plaintiffs had been doing business under the firm name of “Sharruf
& Co.”, insuring their business in said name, and upon executing
the contract of partnership (Exhibit A) on August 26; 1933, they
changed the title thereof to “Sharruf & Eskenazi,” the membership
of the partnership in question remained unchanged, the same and only
members of the former, Salomon Sharruf and Elias Eskenazi, being the
ones composing the latter, and it does not appear that in changing the
title of the partnership they had the intention of defrauding the
herein defendant insurance companies. Therefore, under the above-cited
doctrine the responsibility of said defendants to the plaintiffs by
virtue of the respective insurance policies has not been altered. If
this is true, the plaintiffs have juridical personality to bring this
action.

The second question to be decided is that raised in the second
assignment of alleged error, which, consists in whether or not the fire
which broke out in the building at Nos. 299-301 Muelle de la Industria,
occupied by the plaintiffs, is of incendiary origin.

In maintaining the affirmative, the appellants call attention to
the earthen pots Exhibits 15 and 16, the first found by detective
Manalo beside the railing of the stairway of the upper floor and the
second found by detective Irada on the first floor, both containing
liquid, ashes and other residues which smelled of petroleum; a red rag
(Exhibit 18) found by detective Irada in front of the toilet; the
partially burnt box (Exhibit 20); and the old can, (Exhibit 21)
containing garbage. The fact that the liquid found by the detectives in
the earthen jars smelled of petroleum, does not constitute conclusive
evidence that they had been used as containers for petroleum to burn
the house. Said smell could have very well come from the strips of
China wood of which boxes from abroad are made, the resin of which
smells of petroleum, or from the rags found therein which might have
been used to clean the floor by saturating them with petroleum. There
being petroleum for cleaning the floor in the building, it is not
strange that when the house caught fire the petroleum also caught fire,
the flames floating on the water coming out from under the door from
the pumps. There is neither direct nor strong circumstantial evidence
that the plaintiffs personally or through their agents placed petroleum
in the building in order to burn it, because it was locked on the
outside and nobody was staying therein. As it cannot be assumed that
the petroleum might have burned by itself, it is probable that the fire
might have originated from the electric wiring, although electrical
engineer Mora stated that he could not assure whether any of the wires
was burned due to an electric discharge passing through it, or whether
or not the fire was caused by the lighting system.

Upon consideration of all the evidence and circumstances
surrounding the fire, this court finds no evidence sufficient to
warrant a finding that the plaintiffs are responsible for the fire.

With respect to the question whether or not the claim of loss filed
by the plaintiffs is fraudulent, it is alleged by them that the total
value of the textiles contained in cases deposited inside the building
when the partnership Sharruf & Eskenazi was formed was P12,000;
that of the fancy jewelry with imitation stones from P15,000 to
P17,000, and that of the kitchen utensils and tableware made of
aluminum, bronze and glass P10,676 (Exhibits B, C, and G—1). If, as
said plaintiffs claim, they had already sold articles, mostly textiles,
valued at P8,000, a small quantity of cloth must have been left at the
time the fire occurred. In their claim, however, the textiles allegedly
consumed by fire and damaged by water are assessed by them at P12,000.
The claim of P12,000 is certainly not attributable to a mere mistake in
estimate and counting because if they had textiles worth only P12,000
before the fire and they sold goods, mostly textiles, worth P8,000,
surely textiles in the same amount of P12,000 could not have been
burned and damaged after the fire. Of the kitchen utensils and
tableware made of aluminum, bronze and glass, of which, according to
the evidence for the plaintiffs, they had a stock valued at P10,676
(Exhibit B), there were found after the fire articles worth only
P1,248.80 (Exhibit K). Therefore, utensils valued at P9,427.20 were
lacking. A considerable amount of kitchen utensils made of
noninflammable and fireproof material could not, by the very nature of
things have been totally consumed by the fire. At most, said articles
would have been damaged, as the rest, and would have left traces of
their existence. The same may be said of the fancy jewels with
imitation stones, and others of which the plaintiffs claim to have had
a stock worth from P15,000 to P17,000 at the time of the fire, of which
only a few valued at P3,471.16, were left after the fire (Exhibit K).
According to said plaintiffs, all the articles, for the alleged loss of
which indemnity is sought, were contained in. about 40 cases kept on
the upper and lower floors of the building, in showcases and wardrobes.
According to the testimony of the fire station chiefs, corroborated by
the photographs of record, the flames caused more damage in the upper
part of the rooms than in the lower part thereof; since, of the ten or
eleven cases found inside the building after the fire, only a few were
partially burned and others scorched. Judging from their appearance,
the goods were damaged more by water than by fire. According to the
inventory made by White & Page, adjusters of the insurance
companies, in the presence of the plaintiffs themselves and according
to data supplied by the latter, the total value thereof, aside from the
articles not included in the inventories Exhibits B, C, and C-l,
assessed at P744.50, amounts to only P8,077.35. If the plaintiffs’
claim that at the time of the fire there were about 40 cases inside the
burnt building were true, as ten or eleven of them were found after the
fire, traces of the thirty or twenty-nine cases allegedly burnt would
be found, since experience has shown that during the burning of a
building all the cases deposited therein are not so reduced to ashes
that the least vestige thereof cannot be found. In the case of Go Lu vs. Yorkshire Insurance Co. (43 Phil., 633), this court laid down the following doctrine:

“This court will legally presume that in an ordinary
fire fifty bales or boxes 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.”

The plaintiffs, upon whom devolve the legal obligation to prove the
existence, at the time of the fire, of the articles and merchandise for
the destruction of which they claim indemnity from the defendant
companies, have not complied with their duty because they have failed
to prove by a preponderance of evidence that when the fire took place
there were in the burnt building articles and merchandise in the total
amount of the insurance policies or that the textiles and other damaged
and undamaged goods found in the building after the fire were worth
P40,000. On the contrary, their own witness, Robles, testified that up
to the month of September, 1933, there were about 39 or 40 cases
belonging to the plaintiffs in his garage on Mabini Street indicating
thereby that the cases of merchandise examined by the agent of the
insurance companies on July 25 and August 15, 1933, and for which the
insurance policies were issued, were taken from the burned building
where they were found. So great is the difference between the amount of
articles insured, which the plaintiffs claim to have been in the
building before the fire, and the amount thereof shown by the vestige
of the fire to1 have1 been therein, that the most liberal human
judgment can not attribute such difference to a mere innocent error in
estimate or counting but to a deliberate intent to demand of the
insurance companies payment of an indemnity for goods not existing at
the time of the fire, thereby constituting the so-called “fraudulent
claim” which, by express agreement between the insurers and the
insured, is a ground for exemption of the insurers from civil liability.

Therefore, as the herein plaintiffs-appellees have acted in bad
faith in presenting a fraudulent claim, they are not entitled to the
indemnity claimed by them by virtue of the insurance policies issued by
the defendant-appellant companies in their favor.

For the
foregoing considerations, this court is of the opinion and so holds:
(1) that when the partners of a general partnership doing business
under the firm name of “Sharruf & Co.” obtain insurance policies
issued to said firm and the latter is afterwards changed to “Sharruf
& Eskenazi”, which are the names of the same and only partners of
said firm “Sharruf & Co.”, continuing the same business, the new
firm acquires the rights of the former under the same policies; (2)
that when the evidence relative to the cause of a fire and the author
thereof is so vague and doubtful, the insured cannot be attributed
incendiary intervention therein for the mere fact that he had the keys
to the unoccupied building in his possession; (3) that a person who
presents a claim for damages caused by fire to articles and goods not
existing at the time of the fire does so fraudulently and his claim is
fraudulent, and (4) that when, immediately after a fire that broke out
inside a completely locked building, lasting scarcely 27 minutes, only
about ten or eleven partly burned and scorched cases, some containing
textiles and wrapping paper and others, statues of saints, have been
found without any trace of the destruction of other cases by said fire,
it can neither logically nor reasonably be inferred that 40 of said
cases were inside the building when the fire broke out.

Wherefore, the appealed judgment is reversed, and the defendant
companies are absolved from the complaint which is dismissed, with
costs to the appellees. So ordered.

Avancena, C. J., Abad Santos, Imperial, Diaz, Laurel, and Concepcion, JJ., concur.