Concealment 24. NEW LIFE ENTERPRISES AND JULIAN SY VS. CA
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GR 94071 March 31, 1992 Ponente: Regalado, J. Summary: HINDI NIYA NABASA NA KELANGAN I-DECLARE KUNG MAY PREVIOUSLY INSURED [ CO-INSURANCE] YUNG SAME OBJECT. In this case: pwede non-disclosure provided total indemnity is not more than 200k
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FACTS
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Julian Sy and Jose Sy Bang have formed a business partnership in the City of Lucena. Under the business name of New Life Enterprises, the partnership engaged in the sale of construction materials at its place of business, a two-storey building situated at Iyam, Lucena City. Julian Sy insured the stocks in trade of New Life Enterprises with Western Guaranty Corporation, Reliance Surety and Insurance. Co., Inc., and Equitable Insurance Corporation. Acquired fire insurance insurance from 3 different insurance insurance companies a. May 15, 1981 - Western Guaranty Corporation issued Fire Insurance Policy No. 37201 in the amount of P350,000.00. This policy was renewed on May, 13, 1982. b. July 30,1981, Reliance Surety and Insurance Co., Inc. issued Fire Insurance Policy No. 69135 in the amount of P300,000.00 (Renewed under Renewal Certificate No. 41997) An additional insurance was issued by the same company on November 12, 1981 under Fire Insurance Policy No. 71547 in the amount of P700,000.00. c. February 8, 1982n- Equitable Insurance Corporation issued Fire Insurance Policy No. 39328 in the amount of P200,000.00. Fire incident occurred: When the building occupied by the New Life Enterprises was gutted by fire at about 2:00 am of October 19, 1982, stocks in the trade inside said building were insured against fire in the total amount of P1,550,000.00. Electrical cause of the said accident: According to the certification issued by the Headquarters, Philippine Constabulary /Integrated National Police, Camp Crame, the cause of fire was electrical i n nature. According to the plaintiffs, the building and the stocks inside were burned.: After the fire, Julian Sy went to the agent of Reliance Insurance whom he asked to accompany him to the office of the company so that he can file his claim. He averred that in support of his claim, he submitted the fire clearance, the insurance policies and inventory of stocks. Insurance companies- Denial of Claim: Julian Sy further testified that the
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also pay. The same treatment was given him by the other insurance companies. Ultimately, the three insurance companies denied plaintiffs' claim for payment. Denial of Claim- Initial Reason: Reliance Insurance purveyed the same message in its letter dated November 23, 1982 and signed by Executive Vice-President Mary Dee Co, which said that "plaintiff's claim is denied for breach of policy conditions. Denial of Claim -Non-Disclosure of Previous Insurance on said goods Admission of non-disclosure that it co-insure co-insure said goods: goods: Petitioners admit that the respective insurance policies issued by private respondents did not state or endorse thereon the other insurance coverage obtained or subsequently effected on the same stocks in trade for the loss of which compensation is claimed by petitioners In other words, the coverage by other insurance or co-insurance effected or subsequently arranged by petitioners were neither stated nor endorsed in the policies of the three (3) private respondents, warranting forfeiture of all benefits thereunder if we are to follow the express stipulation in the aforequoted Policy Condition No. 3. Petitioners contend that they are not to be blamed for the omissions, alleging that insurance agent Leon Alvarez (for Western) and Yap Kam Chuan (for Reliance and Equitable) knew about the existence of the additional insurance coverage and that they were not informed about the requirement that such other or additional insurance should be stated in the policy, as they have not even read policies. Petitioner should have express his disagreement with the said insurance contract Petitioners should be aware of the fact that a party is not relieved of the duty to exercise the ordinary care and prudence that would be exacted in relation to other contracts. The conformity of the insured to the terms of the policy is implied from his failure to express any disagreement with what is provided for
ISSUE: WON Conditions 3 and 27 of the Insurance Contracts were violated by petitioners thereby resulting in their forfeiture of all the benefits thereunder (YES) RATIO
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Condition No. 3 of said insurance policies, otherwise known as the "Other Insurance Clause," is uniformly contained in all the aforestated insurance contracts of herein petitioners, as follows: 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 and/or inventories only hereby insured, and unless such notice be given and the particulars of such insurance or insurances be stated therein or endorsed on this policy pursuant to Section 50 of the Insurance Code, by or on
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Sy never disclosed co-insurance in the contracts he entered i nto with the three corporations. The insured is specifically required to disclose the insurance that he had contracted with other companies. Sy also contended that the insurance agents knew of the co-insurance. However, the theory of imputed knowledge, that the knowledge of the agent is presumed to be known by the principal, is not enough. 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 i ncumbent upon him to read the contracts. In Pioneer Insurance and Surety Corporation vs. Yap, the obvious purpose of the aforesaid requirement in the policy is to prevent overinsurance and thus avert the perpetration of fraud. The public, as well as the insurer, is interested in preventing the situation in which a fire would be profitable to the insured. “Also, policy condition 15 was used. It stated: 15.. if any false declaration be made or used in support thereof, . . . all benefits under this Policy shall be forfeited . . .” As for condition number number 27, the stipulation read: read: a. 27. Action or suit clause. — If a claim be made and rejected and an action or suit be not commenced either in the Insurance Commission or any court of competent jurisdiction of notice of such rejection, or in case of arbitration taking place as provided herein, within twelve (12) months after due notice of the award made by the arbitrator or arbitrators or umpire, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder. This is regarding Sy’s claim for one of the companies. Recovery was filed in court by petitioners only on January 31, 1984, or after more than one (1) year had elapsed from petitioners' receipt of the insurers' letter of denial on November 29, 1982. This made it void.
FALLO: WHEREFORE, finding no cogent reason to disturb the judgment of respondent Court of Appeals, the same is hereby AFFIRMED.
