New Life v CA

G.R. No. 94071

March 31, 1992

Facts

Julian Sy, for New Life Enterprises took out 3 fire insurance policies for its
building and the stocks thereon from: Western Guaranty Corporation , Reliance
Surety and Insurance Co., Inc. , and Equitable Insurance Corporation. The
building was gutted by fire resulting to a P1.55M loss. Sy filed a claim to recover
proceeds from the 3 insurers, but all denied on the ground of breach of policy
conditions (i.e. failure to disclose co-insurers). Sy averred that the insurers were
sister companies and that each knew the existence of the other insurance
policies.

Issue & Ruling

Whether or not private respondent violated the conditions of the

three insurance policy

Yes. Sy never disclosed co-insurance in the contracts he entered into with

the three corporations. The insured is specifically required to disclose the
insurance that he had contracted with other companies.

Sy admitted that the other insurance taken were not stated or endorsed in the
other respective policies taken from the 3 insurers. For Western and Reliance,
the co-insurers where not stated, whereas in Equitable, the policy even stated
“nil” for the space where the co-insurers were required to be declared. However,
as defense, he said that the insurance agents (agent for Reliance and Equitable
was the same) of the 3 insurers knew of the existence of the subject policies, and
that he was not informed of the requirement to disclose the same. He finally
argued that he did not even read the policy.

The Court held that such knowledge cannot be considered the “notice”
required under the policies, it cannot be the basis to bar the insurers from
denying the claim. Furthermore, the same was of dubious application to the case
and was refuted by the insurers. Sy also contradicted himself in saying that he
informed the agents of the co-insurers, yet likewise claimed that he did not read
the policies.

When the words of the document are readily understandable by an

ordinary reader, there is no need for construction anymore. The conformity of
the insured to the terms of the policy is implied with his failure to disagree with
the terms of the contract. Since Sy, was a businessman, it was incumbent upon
him to read the contracts.