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Haussermann, Ortigas, Cohn and Fisher, for appellant Kincaid & Hurd and Thomas L. Hartigan, for appellee.
JOHNSON, J.: On the 13th of July, 1908, the plaintiff commenced an action against the defendant to recover the sum of P9,841.50, the amount due, deducting the salvage, upon the following fire insurance policy issued by the defendant to the plaintiff: [Fire policy No. 3007499.] This policy of insurance witnesseth, that E. M. Bachrach, esq., Manila (hereinafter called the insured), having paid to the undersigned, as authorized agent of the British American Assurance Company (hereinafter called the company), the sum of two thousand pesos Philippine currency, for insuring against loss or damage by fire, as hereinafter mentioned, the property hereinafter described, in the sum of several sums following, viz: Ten thousand pesos Philippine currency, on goods, belonging to a general furniture store, such as iron and brass bedsteads, toilet tables, chairs, ice boxes, bureaus, washstands, mirrors, and sea-grass furniture (in accordance with warranty "D" of the tariff attached hereto) the property of the assured, in trust, on commission or for which he is responsible, whilst stored in the ground floor and first story of house and dwelling No. 16 Calle Martinez, district 3, block 70, Manila, built, ground floor of stone and or brick, first story of hard wood and roofed with galvanized iron — bounded in the front by the said calle, on one side by Calle David and on the other two sides by buildings of similar construction and occupation. Co-insurance allowed, particulars of which to be declared in the event of loss or claim. The company hereby agrees with the insured (but subject to the conditions on the back hereof, which are to be taken as a part of this policy) that if the property above described, or any part thereof, shall be destroyed or damaged by fire, at any time between the 21st day of February, 1908, and 4 o'clock in the afternoon of the 21st day of February, 1909, or (in case of the renewal of this policy) at any time afterwards, so long as, and during the period in respect of which the insured shall have paid to the company, and they shall have accepted, the sum required for the renewal of this policy, the company will, out of their capital stock, and funds, pay or make good to the insured the value of the property so destroyed, or the amount of such damage thereto, to any amount not exceeding, in respect of each or any of the several matters
and not exceeding in the whole the sum of ten thousand pesos.. That the plaintiff maintained a paint and varnish shop in the said building where the goods which were insured were stored. That the plaintiff transferred his interest in and to the property covered by the policy to H. Third... the British American Assurance Company has accused these presents to be signed this 21st day of February........ and also not exceeding... the sum set opposite thereto. LTD. as required by the said policy.. in the year of our Lord 1908.. but only whilst contained in the reservoir of the car...... which can was so placed by the plaintiff as to permit the gasoline to run on the floor of said second story..... It is further warranted that the car be neither filled nor emptied in the within-described building or this policy be null and void. thereby greatly increasing the risk of fire. 27th February.... F... These special facts are as follows: First.." The defendant answered the complaint. "By.... to secure certain indebtedness due and owing to said company. "Manager Agents. The defendant also alleged certain facts under which it claimed that it was released from all obligations whatever under said policy..... in any case... That the sanction of the said defendant had not been obtained by the plaintiff..... willfully placed a gasoline can containing 10 gallons of gasoline in the upper story of said building in close proximity to a portion of said goods......... placed in close proximity to said escaping gasoline a lighted lamp containing alcohol. STEVENSON & Co.. and merchandise.... and also that the plaintiff had transferred his interest in certain of the goods covered by the said policy to one Macke..... he. 1908.. LTD... on the 18th of April... the amount of the insurable interest therein of the insured at the time of the happening of such fire... respectively.. STEVENSON & Co. the plaintiff. Memo: Permission is hereby granted for the use of gasoline not to exceed 10 gallons for the above automobile... F.250) twelve hundred and fifty pesos Philippine currency....... W..... "By.... That the plaintiff..... "W. .. and after so placing said gasoline..." And indorsed on the back the following: The within policy and includes a "Calalac" automobile to the extent of (P1. to secure certain obligations assumed by the said Macke for and on behalf of the insured..above specified. W.... and immediately preceding the outbreak of the alleged fire... In witness whereof. 1908.. Peabody & Co.. For the company.. Manila. "Manager Agents........ admitting some of the facts alleged by the plaintiff and denying others. wares. Second.
No. The court erred in failing to find as a fact that E. were waived by the defendant. That her had made no proof of the loss set up in his complaint for the reason that immediately after he had. No. after a trial duly and regularly had. wares. the defendant. and that the acts or omissions on the part of the insured which cause. and that said can was so placed by said Bachrach as to permit the gasoline to run on the floor of said second story. the lower court found that the defendant was liable to the plaintiff and rendered a judgment against the defendant for the sum of P9. 7. in close proximity to a portion of the goods. with costs. The court erred in holding that the policy of insurance was in force at the time of said fire. had waived all right to require proof of said loss by denying all liability under the policy and by declaring said policy to be null and void.99. 2. That the plaintiff made no proof of the loss within the time required by condition five of said policy. nor of the goods saved. based upon the same alleged facts set out in the answer of the defendant.841. . 6. nor the loss suffered. 5. thereby greatly increasing the risk of fire. given the defendant due notice in writing of said loss. 16 Calle Martinez. 4. the insured. which was saved without damage.net 8. lawphil. The plaintiff. The court erred in failing to hold the execution of the chattel mortgages without the knowledge and consent of the insurance company annulled the policy of insurance. 3. From that decision the defendant appealed and made the following assignments of error: 1. upon a charge of arson. That he had been acquitted in a criminal action against him. alleged: First. The court erred in holding the defendant liable for the loss under the policy.50. wares. Second. and thereafter on other occasions. 1908. nor did the insured file a statement with he municipal or any other judge or court of the goods alleged to have been in said building at the time of the alleged fire. 16 Calle Martinez was not such a violation of the conditions of the policy as to render the same null and void. on the 21st of April. after denying nearly all of the facts set out in the special answer of the defendant. The court erred in refusing to deduct from the loss sustained by Bachrach the value of the automobile. on the 20th of April. making a total of P10. Bachrach. or tended to cause. willfully placed a gasoline can containing about 10 gallons of gasoline in the upper story of said building.Fourth. After hearing the evidence adduced during the trial of the cause. The court erred in holding that the keeping of gasoline and alcohol not in bottles in the building No. 16 Calle Martinez. with interest for a period of one year at 6 per cent. Bachrach. after placing said gasoline can in close proximity to the goods. and merchandise covered by the policy of insurance. and merchandise stored therein. M.431. The court erred in failing to hold that the use of the building. The court erred in failing to find as a fact that E. 1908. M. the forfeiture of the policy. the he (Bachrach) placed in close proximity to said escaping gasoline a lighted lamp containing alcohol. as a paint and varnish shop annulled the policy of insurance.
it will be noted that there is no provision in said policy prohibiting the plaintiff from placing a mortgage upon the property insured. W. The property insured consisted mainly of household furniture kept for the purpose of sale. 10. Rep. in passing upon this question as it was presented: It is claimed that the execution of a chattel mortgage on the insured property violated what is known as the "alienation clause.. of Law. The court erred in refusing to grant the motion for a new trial. & Eng. Pioneer Furniture Company. where a furniture factory keeps benzine for the purposes of operation (Davis vs. With reference to this assignment of error.). though the keeping of the benzine on the premises is expressly prohibited. and it is held by the great weight of authority that the interest in property insured does not pass by the mere execution of a chattel mortgage and that while a chattel mortgage is a conditional sale. upon reading the policy of insurance issued by the defendant to the plaintiff. though he also says that the alcohol was kept in store and not in the bodega where the furniture was. These authorities also appear sufficient to answer the objection that the insured automobile contained gasoline and that the plaintiff on one occasion was seen in the bodega with a lighted lamp. the insurer can not on that ground avoid payment of loss. (Cases 6496 and 6497. The evidence offered by the plaintiff is to the effect that alcohol was used in preparing varnish for the purpose of retouching. 158). It may be added that there was no provision in the policy prohibiting the keeping of paints and varnishes upon the premises where the insured property was stored. admitting that such a provision was intended. there is no alienation within the meaning of the insurance law until the mortgage acquires a right to take possession by default under the terms . The preservation of the furniture in a salable condition by retouching or otherwise was incidental to the business. and which is expressed in the policies involved in cases 6496 and 6497 by a purchase imposing forfeiture if the interest in the property pass from the insured. without the knowledge and consent of the insurance company and without receiving the sanction of said company. it ought to have been plainly expressed in the policy. The testimony on this point is somewhat conflicting. 78 N.. 647). though prohibited by the policy. or where it is used for the cleaning machinery (Mears vs. 596. He said. Encyc.) This clause has been the subject of a vast number of judicial decisions (13 Am. 2d ed. American Fire Insurance Company. The first was incidental to the use of the insured article and the second being a single instance falls within the doctrine of the case last cited. but. 92 Pa. annulled the said policy of insurance. 15. With reference to the first above assignment of error. It is well settled that the keeping of inflammable oils on the premises..9.. St.. Faust vs. If the company intended to rely upon a condition of that character. we think the lower court has completely answered this contention of the defendant. does not void it if such keeping is incidental to the business. the construction given to this claim by American courts would not justify the forfeiture of the policy on that ground. 239 et seq. the lower court in its decision said: It is claimed that either gasoline or alcohol was kept in violation of the policy in the bodega containing the insured property. the defendant and appellant contends that the lower court erred in failing to hold that the execution of the said chattel mortgage. The court erred in refusing to enter judgment in favor of the defendant and against the plaintiff. Humboldt Insurance Company. 91 Wis. in which are involved other action against other insurance companies for the same loss as in the present action. 37 Am. Rep. pp. but conceding all of the defendant's claims." which is now found in most policies. Thus. With reference to the second above assignment of error.
yet. Beamount. with the assistance of two assessors. & Eng.of the mortgage. And regardless of whether or not the judgment in that proceeding is res adjudicata as to anything here. While the evidence shows some very peculiar and suspicious circumstances concerning the burning of the goods covered by the said policy. Encyc. It is well settled by a preponderance of authorities that such a denial is a waiver of notice of loss. Rep." and in effect denying liability. The record discloses that some time prior to the commencement of this present action.) In order to find that the defense of incendiarism was established here. The last-named provision is similar to one appearing in many American policies requiring a certificate from a magistrate nearest the loss . and this we would be loath to do even though the evidence now produced were much stronger than it is. (Turtell vs. in view of the findings of the lower court and in view of the apparent conflict in the testimony. we are at least of the opinion that the evidence to establish this defense should not be materially less convincing than that required in order to convict the insured of the crime of arson. That was done by another branch of this court in disposing of the criminal prosecution brought against the insured. because if the "policies are null and void. (13 Am. "immediate notice" is construed to mean only within a reasonable time. No such right is claimed to have accrued in the case at bar." the furnishing of such notice would be vain and useless. neither is there any provision in the policy relating to the facts alleged in said assignment of error. in which he was charged with willfully and maliciously burning the property covered by the policy in the present case. the lower court. With reference to the third assignment of error above noted. Much the same may be said as to the objection that the insured failed to furnish to the insurers his books and papers or to present a detailed statement to the "juez municipal. the fact remains that on the following day the insurers replied by a letter (Exhibit C) declaring that the "policies were null and void. upon a reading of the decision of the lower court it will be found that there is nothing in the decision of the lower court relating to the facts stated in this assignment of error. in effect to set aside the findings of the judge and assessors in the criminal cause. of Law. Assignment of error numbers 4 and 5 above noted may be considered together. 349. in discussing this question. a criminal action was commenced against the plaintiff herein in the Court of First Instance of the city of Manila.) Besides. The lower court. in discussing this question. At the conclusion of the criminal action and after hearing the evidence adduced during the trial. we consider it unnecessary to review the evidence in detail. found that the evidence was insufficient to show beyond peradventure of doubt that the defendant was guilty of the crime. nevertheless. The evidence adduced during the trial of the criminal cause was introduced as evidence in the present cause. on the same ground. therefore. 644. said: As to the claim that the loss occurred through the voluntary act of the insured. said: itc@alf Regardless of the question whether the plaintiff's letter of April 20 (Exhibit B) was a sufficient compliance with the requirement that he furnish notice of loss. we would be obliged." in accordance with article 404 of the Code of Commerce. 348. 25 Rev. 347. to wit: That the court erred in holding that the policy of insurance was in force at the time of said fire and that the acts or omissions on the part of the insured which caused or tended to cause a forfeiture of the policy were waived by the defendant. we can not find that there is a preponderance of evidence showing that the plaintiff did actually set fire or cause fire to be set to the goods in question. and the alienation clause is therefore inapplicable.. based mainly on the same evidence. the lower court. With reference to the sixth assignment of error above noted.
95 Va. It is alleged that the salvage amounted to P4. Y. A denial of liability on other grounds waives this requirement (O'Niel vs. the insured might have had difficulty in attempting to comply with this clause. 122. concurs in the result. The defendant and appellant in the present case made no objection at any time in the lower court to that distribution of the salvage. Arellano. vs.regarding the circumstance thereof. it may be added that there was no requirement in the policy in question that such notice be given. The claim is now made for the first time.. 25 Ill.000) was distributed among the different insurers and the amount of their responsibility was proportionately reduced. 751. Besides. among all of the insurers. With reference to the eight assignment of error above noted. as well as that relating to the production of books and papers (Ga. This amount (P4.. So ordered. for there is no longer an official here with the title of "juez municipal. The defendant stood by and allowed the other insurers to share in the salvage. which he claims now wholly belonged to him. with interest at the rate of 6 per cent from the 13th of July. including the automobile. J. and Torres. J.250) of the said automobile. The lower court had no opportunity to pass upon the question now presented for the first time. with costs. 382).. 66 Jur. Whitehill. No reason is given why the objection was not made at the time of the distribution of the salvage. 1915 .50.. Home Ins. Trent. Goode & Co. and it is hereby ordered that judgment be entered against the defendant and in favor of the plaintiff for the sum of P9. 1908.." Besides the foregoing reasons.841. dissents.R. C. With reference to the assignments of error numbers 7. Co. EN BANC G. Moreland. and 10. vs. 3 N. concur. For all the foregoing reasons. 16). they are too general in their character to merit consideration. including the automobile.. J.. J. We think it is now too late to raise the question. L-9370 March 31. Civ. No. 9.. the defendant and appellant contends that he was entitled to have the amount of his responsibility reduced by the full value (P1.. we are of the opinion that the judgment of the lower court should be affirmed. Co. Peoria Marine Ins.000. It does not positively appear of record that the automobile in question was not included in the other policies. It does appear that the automobile was saved and was considered as a part of the salvaged. Buffalo Fire Insurance Company.
vs. Lawrence. THE MIDLAND TEXTILE INSURANCE COMPANY. entered into a contract of insurance with the plaintiff (policy No. which belonged to him and which were filed with fireworks. and occupied a building at 321 Calle Claveria. Both of the parties agree that said fireworks come within the phrase "hazardous goods. 1913. On the 18th day of March. plaintiff-appellee. under the conditions above enumerated. On the 4th or 5th of February. 7. Bruce. On the 29th of May. defendant-appellant. Aitken for appellee. 2. they being "hazardous goods. in case said residence and bodega and contends should be destroyed by fire. 3. The plaintiff conducted a candy and fruit store on the Escolta. until after the fire of the 18th of March. From that judgment the defendant appealed to this court. 1913. upon certain conditions. as a residence and bodega (storehouse). 1913. the defendant. J. promised to pay to the plaintiff the sum of P3. said residence and bodega and the contents thereof were partially destroyed by fire. 1912. Thos D. The only question presented by the parties is whether or not the placing of said fireworks in the building insured. That said fireworks were found in a part of the building not destroyed by the fire. 509105) by the terms of which the defendant company. the plaintiff placed in said residence and bodega three boxes. YOUNG.000 upon an insurance policy.000. Ross and Block for appellant. and that the plaintiff then placed the same in said bodega. The lower court rendered a judgment in favor of the plaintiff and against the defendant for the sum of P2. 18 by 18 by 20 inches measurement." is a violation of the terms of the contract of insurance and especially of "warranty B. or to the loss occasioned thereby. and no hazardous trade or process be carried on. that they in no way contributed to the fire. 5. Said fireworks had been given to the plaintiff by the former owner of the Luneta Candy Store." mentioned in said "warranty B" of the policy. or in any building connected therewith. that the authorities of the city of Manila had prohibited the use of fireworks on said occasion. and costs. The undisputed facts upon which said action is based are as follows: 1. in the building to which this insurance applies. in consideration of the payment of a premium of P60. On the conditions of said contract of insurance is found in "warranty B" and is as follows: "Waranty B.: The purpose of the present action is to recover the sum of P3. It is admitted by both parties that the fireworks are ." 4.K.78." "Warranty B" provides that "no hazardous goods be stored" in the building insured. S. that the plaintiff intended to use the same in the celebration of the Chinese new year. where they remained from the 4th or 5th of February. — It is hereby declared and agreed that during the pendency of this policy no hazardous goods stored or kept for sale. 6.708. q913. JOHNSON. in the city of Manila. 8.
depend upon the intention of the parties." The plaintiff contends that under all the facts and circumstances of the case. gunpowder." While the word "stored" has been variously defined by authors. as well as by courts." and if they were "stored. . Where such articles or goods were used for lighting purpose. and for actual daily use. in view of the many decisions upon the various conditions presented. such as gasoline. or for safe keeping. under the conditions above described. and excepted from the operation of the warranty. for safe. then and there. Said definitions. and 3. they were not "stored" in said building."hazardous goods. The plaintiff makes no claim that he deposited them there with any other idea than "for future use" — for future consumption. and within the intention of the parties. we have found no case exactly analogous to the present. as that word is generally defined. etc.. even after the fire? If the "warranty" is a term of the contract. for daily use. do not include a deposit in a store. such as oil. in declaring the policy null and of no effect by reason of a violation of its terms on he par of the plaintiff? If it might. The rate of premium is measured by the character of the risk assumed. See also the definitions given by the Standard Dictionary. In the present case no claim is made that the "hazardous goods" were placed in the bodega for present or daily use. The parties have a right to impose such reasonable conditions at the time of the making of the contract as they may deem wise and necessary. Both the plaintiff and defendant agree that if they were "hazardous goods. etc. for a comparatively small consideration. to the same effect. paints. The plaintiff says that he placed said fireworks in the bodega after he had been notified that he could not use them on the Chinese new year. or safe keeping. Where merchants have had or kept the "hazardous" articles in small quantities. The insurance company." or for future consumption. Whether a particular article is "stored" or not must." then the act of the plaintiff was a violation of the terms of the contract of insurance and the defendant was justified in repudiating its liability thereunder. even in the absence of a fire. which might easily have been permitted by the terms of the policy. in order that he might later send them to a friend in the provinces. undertakes to guarantee the insured against loss or damage. will not its violation cause a breach and justify noncompliance or a repudiation? Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy. and had found he "hazardous goods" there. like the present. and in small quantities. It seems clear to us that the "hazardous goods" in question were "stored" in the bodega. and in small quantities. then may it no repudiate is liability. and that the placing of them in the building was not a violation of the terms of the contract. and upon no other. o place in a warehouse or other place of deposit for safe keeping. The author of the Century Dictionary defines the world "store" to be a deposit in a store or warehouse for preservation or safe keeping. The interpretation of the word "stored" is quite difficult. "Daily use" precludes the idea of a deposit for preservation or safe keeping. It is admitted that they were placed in the bodega "for future use. upon the terms and conditions agreed upon. in some degree. That being true. This leads us to a consideration of the meaning of the accord "stored" as used in said "warranty B. of course. Said decision are upon cases like: 1. 2. Where such articles have been brought on the premises for actual use thereon." The defendant alleged that they were "stored. in small quantities. as well as a deposit for future consumption. suppose the defendant had made an examination of the premises. Nearly all of the cases cited by the lower court are cases where the article was being put to some reasonable and actual use. would it not have been justified.
No. the benefits of an insurance policy upon one risk.. and if it appears that the contract has been terminated by a violation. (Imperial Fire Ins. Commercial Union Assurance Co. the judgment of the lower court is hereby revoked and the defendant is hereby relieved from any responsibility under said complaint. The defendant had neither been paid nor had issues a policy to cover the increased risk.) The plaintiff paid a premium based upon the risk at the time the policy was issued. (Kyte vs. That argument. are to be construed according to the sense and meaning of the terms which the parties themselves have used. that in view of the fact that the "storing" of the fireworks on the premises of the insured did not contribute in any way to the damage occasioned by the fire.R. as a general rule. The compliance of the insured with the terms of the contract is a condition precedent to the right of recovery. it is so ordered. 122. if the evidence brings the case clearly within their meaning and intent. Oxford Fire & Life Ins. (Kyte vs. 67 Pa. 240. a plain case is attempted to be taken without the operation of a clear. and. Certainly it cannot be denied that the placing of the firecrackers in the building insured increased the risk. Co. may justly insist upon a fulfillment of these terms.. 560. is beside the question. (Mack vs. The violation of the terms of the contract. if his contention may be allowed may be allowed.) Therefore and for the foregoing reasons. he should be permitted to recover — that the "storing" of the "hazardous goods" in no way caused injury to the defendant company.. An increase of risk which is substantial and which is continued for a considerable period of time. if the "storing" was a violation of the terms of the contract. 106 N. as a matter of fact. and such a violation or want of performance has not been waived by the insurer. and changes the basis upon which the contract of insurance rests. 302.) The conditions of contracts of insurance. are binding upon the parties and should be enforced by the courts. Commercial Union Assurance Co. If the insured cannot bring himself within the conditions of the policy. Arellano. 37 Minn. when plainly expressed in a policy. Y. of its conditions.. neither had the defendant issued a policy upon the theory of a different risk. C. While it is true. Moore vs. JJ.. The plaintiff had not paid a premium based upon the increased risk. 149 Mass. (supra). 116. If such terms are clear and unambiguous they must be taken and understood in their plain. without any finding as to costs. at the election of either party.. 300. County of Coos. 564. on the part of the insured. L-27932 October 30. in case of loss. The terms of the policy constitute the measure of the insurer's liability. It tends to bring the law itself into disrepute when. EN BANC G. Co. Courts are not permitted to make contracts for the parties..J. Carson. and material obligation of the contract. 149 Mass. S. 542. Frost's Detroit Lumber Works vs. concurs in the result.Millers' Mutual Ins. therefore. 373. If the insured has violated or failed to perform the conditions of the contract. The function and duty of the courts consist simply in enforcing and carrying out he contracts actually made. The plaintiff was enjoying.. Ferree vs. vs.. Phoenix Ins. however. Co. Co..) The appellant argues. however. that contracts of insurance are construed most favorably to the insured. H. by virtue of the provisions of the policy itself. Kyte vs. 62 N.. he is not entitled to recover for the loss. then there can be no right of recovery. and in order to recover the insured must show himself within those terms.. 122. Co. reasonable. he contractual relations. Trent and Araullo. it was issued upon an entirely different risk. 116. State. concur. the insurer. whereas. by astute and subtle distinctions.and when called upon to pay. J. 1972 . yet contracts of insurance.. like other contracts. Rochester German Ins. is a direct and certain injury to the insurer.. 151 U. then the insured cannot recover. Torres. Moreland.. ordinary and popular sense. Commercial Union Assurance Co. terminated.
Union Manufacturing Co. PHILIPPINE GUARANTY CO.00 in favor of the assured.00 with interest at 9% per annum from said date and to secure the payment thereof. H. Inc. Inc. INC... Francisco and Aquino for defendant-appellee. Inc.. Abad. P85.. Inc. as described in defendant's 'Cover Note' dated September 25. thru its adjuster. Inc.. There was no denial thereof from the insured. was in vain. Gamelo. Inc... 1964. 1962. The defect being legally incurable. Inc. the same was renewed by the Republic Bank upon payment of the corresponding premium in the same amount of P6.000. . was able to avoid liability upon proof that there was a violation of a warranty. the insurer.12. and the REPUBLIC BANK.. 1962. P300. was paid by the Republic Bank to the defendant.. (5) That upon the expiration of said fire policy on September 25...000. overdrafts and other credit accommodations from the Republic Bank in the total sum of P415. 43170 . obtained certain loans. was reminded of said requirement.. (3) That as Union Manufacturing Co.. (b) Machineries. H.00. Policy Condition No. the Union Manufacturing Co.000. such payment was for the account of Union Manufacturing Co. (7) That sometime on September 6.. failed to secure insurance coverage on the mortgaged properties since January 12. Fire Insurance Policy No.... the Republic Bank procured from the defendant. its appeal is likewise futile.688.. Sincere Insurance for P25. the effort of the Republic Bank. 1964 .. it appears that although said renewal premium was paid by the Republic Bank. the following facts are not disputed: "(1) That on January 12. Inc.000. a fire occurred in the premises of the Union Manufacturing Co. its general manager..663. plaintiffs. We affirm. Philippine Guaranty Co. 1962. plaintiff-appellant.00. FERNANDO. Inc. Inc.. Philippine Guaranty Co. an insurance coverage on loss against fire for P500.:p In a suit arising from a fire insurance policy. for plaintiff-appellant. Union Manufacturing Co.000.12. and (c) Merchandise Inventory.52 on September 26. on the following grounds: 'a.. vs. Sr.000.UNION MANUFACTURING CO. 1964. for which the corresponding premium in the sum of P8.00. Inc. Inc. Inc. which was reduced to P6. 3 and/or the 'Other Insurance Clause' of the policy violated because you did not give notice to us the other insurance which you had taken from New India for P80.. (2) That as additional condition of the mortgage contract.. the main plaintiff and now the sole appellant.000... the Union Manufacturing Co.. which are more particularly described and listed at the back of the mortgage contract . Armando L.. executed a real and chattel mortgages on certain properties. despite the fact that Cua Tok..00 and . 1963.. the Union Manufacturing Co. (6) That in the corresponding voucher . (4) That on September 27. 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.000.00 distributed as follows: (a) Buildings. with the annotation that loss or damage.000. J. Inc.00 over the properties of the Union Manufacturing Co. filed its fire claim with the defendant Philippine Guaranty Co.. Philippine Guaranty Co... 1962.328.. INC.. Bayne Adjustment Co. defendant-appellee. was issued for the sum of P500. if any. defendant in the lower court and now appellee.. by virtue of the cover note in the insurance policy providing that it is entitled to the payment of loss or damages as its interest may appear.. 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. giving a total of P415. which was denied by said defendant in its letter dated November 27. said Union Manufacturing Co. With such a legally crippling blow. As noted in the decision. (8) That on October 6. Inc.. 1963. P30. to recover on such policy as mortgagee.00.00.. undertook to secure insurance coverage over the mortgaged properties for the same amount of P415.000. REPUBLIC BANK.
" 7 The next year.Insurance Declared]: Nil. Inc. 1965 . we hold that in the absolute absence of such notice when it is one of the conditions specified in the fire insurance policy. 1963 to October 7. Philippine Guaranty Co. 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. the same properties were already covered by Fire Policy No..00 and for periods respectively. for appellant Republic Bank to impute to such a decision a failure to abide by the law. It is far from easy. Hence..00 for the period from May 27. 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.. 1963. 43170 was already in full force and effect. 1961 to October 7. An affirmance is indicated. 1962 to January 27. represented that there were no other insurance policies at the time of the issuance of said defendant's policy.. and (10) That when said defendant's Fire Insurance Policy No. and from June 1. Inc.. 6161 of Manila Insurance Co." 5 The tone of confidence apparent in the above excerpts from the lower court decision is understandable.000. or whether a verbal notice is sufficient to render an insurance valid which requires such notice.000. As stated in the opinion of the Court through Justice Johnson: "If the insured has violated or failed to perform the conditions of the contract." 1 There is in the cover note 2 and in the fire insurance policy 3 the following warranty: "[Co. that one turns to for the first explicit formulation as to the controlling principle..00 with the result that these insurances." 4 Why the appellant Republic Bank could not recover. were not endorsed on our policy.. 8 the conformity of the insured to the terms of the policy. without the consent of the defendant. penned by Justice Villa-Real: "Without deciding whether notice of other insurance upon the same property must be given in writing. inasmuch as the Union Manufacturing Co. Inc... obtained other insurance policies totalling P305. secured other fire insurance policies without the written consent of the defendant endorsed on the policy.. (2) Fire Policy No. the Union Manufacturing Co.. The conclusion reached by the lower court finds support in authoritative precedents.. if any. in Ang Giok Chip v.00 for the period from May 15. in Young v." 9 As far back as 1915.. and F-2590 .. the conclusion is inevitable that both the Republic Bank and Union Manufacturing Co. of which we became aware of only after the fire.. Inc. and (b) Policy Condition No. 1965 . The insured may not thereafter be heard to say that he did not read the policy or know its terms. as noted at the outset. Ltd. F-2314 . as payee. 1962 to June 1.. 11 was not complied with because you have failed to give to our representatives the required documents and other proofs with respect to your claim and matters touching on our liability.. the policy is null and void. 43170 . and it appearing furthermore that while the policy of the defendant was in full force and effect the Union Manufacturing Co. As was made clear in the opinion of this Court..Manila Insurance for P200. . since it is his duty to read his policy and it will be assumed that he did so.000. and by insurance policies Nos. whether oral or written.000. to wit: (1) Fire Policy No... cannot recover from the same policy of the defendant because the same is null and void. 1962 .000.00 to cover the properties of the Union Manufacturing Co. It is to Santa Ana v. 1533 of the Sincere Insurance Company for P25. The receipt of this policy by the insured without objection binds both the acceptor and the insured to the terms thereof..000. Inc. Co. 1964 to May 27... Inc. the appeal cannot prosper. from January 27. and the amount of such liability'. Commercial Union Assurance Co. issued Fire Insurance Policy No. 1964 to May 15.00 for the period from October 7. Justice Malcolm: "It is admitted that the policy before us was accepted by the plaintiff. 1963.. when the defendant Philippine Guaranty Co.000.00 for the period from October 7. in case of loss as its "interest may appear subject to the terms and conditions. was stressed in these words of the ponente.. in the sum of P500... for P200.. 6 a 1930 decision. 1962.000. then the insured cannot .00 over the same properties prior to the fire. there must be compliance on the part of the insured with the terms of the policy. 3702 of the Sincere Insurance Company for P25. Inc. 1964 .. for P80. of the Oceanic Insurance Agency for the total sum of P300. 250 of New India Assurance Co. and (3) Fire Policy No. and such a violation or want of performance has not been waived by the insurer.. (9) That as of September.. implied from the failure to express any disagreement with what is provided for. 10 it was categorically set forth that as a condition precedent to the right of recovery. Springfield Fire & Marine Ins. Midland Textile Insurance Company. therefore. clauses and warranties" of the policy was expressed in the appealed decision thus: "However.
the decision of the lower court of March 31. Violation thereof entitles the insurer to rescind.. concur.. 120. that contracts of insurance are construed most favorably to the insured. Reyes. 335. later Chief Justice.. to repeat. 1967 is affirmed. 14 Justice J. 2 Exhibit A. 5 Ibid. Ltd. reserve their votes.. in a 1966 decision. the compelling force of which cannot be denied. Insurance Act) Such misrepresentation is fatal in the light of our views in Santa Ana v. p.recover. as a general rule.L. 4 Decision of the lower court. No costs. pp.B." 15 There is no escaping the conclusion then that the lower court could not have disposed of this case in a way other than it did. 329." 13 As a matter of fact. While it is true. (Sec. there was a reiteration of this Santa Ana ruling in a decision by the then Justice." 11 More specifically. yet contracts of insurance. 6 55 Phil. Courts are not permitted to make contracts for the parties. This is the language used: "The insurance contract may be rather onerous ('one sided'. in General Insurance & Surety Corp. no justification for a reversal. 128-129. Inc. Makalintal... v. Bengzon. must be deemed to be a warranty that the property was not insured by any other policy. JJ. Barredo.. . The function and duty of the courts consist simply in enforcing and carrying out the contracts actually made. is on leave. If such terms are clear and unambiguous they must be taken and understood in their plain. . Record on Appeal. 375. Castro and Teehankee.J. it clearly would have disregarded pronouncements of this Court. C. 116-120. 7 Ibid. WHEREFORE. as the lower court put it). Footnotes 1 Decision of the lower court. 8 56 Phil.. J. 3 Exhibit C. There is. The materiality of non-disclosure of other insurance policies is not open to doubt. are to be construed according to the sense and meaning of the terms which the parties themselves have used. Makasiar. Record on Appeal. Concepcion. terms which the insured accepted or adhered to and which is the law between the contracting parties. v. 12 Thus: "The annotation then. like other contracts. Ng Hua. for this Court. Zaldivar. Had it acted otherwise. but that in itself does not justify the abrogation of its express terms. JJ. Commercial Union Assurance Company. 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. Antonio and Esguerra. & Surety Co. Capital Ins. . Misamis Lumber Corp. ordinary and popular sense. 69.
14 L-21380. 1119. 381. 10 30 Phil. . 617. 12 106 Phil. 15 Ibid. 231. 17 SCRA 228. 13 Ibid. 117 (1960).9 Ibid. 622. May 20. 1966. 11 Ibid.
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