Insurance Case #048 Malayan Insurance Co. Inc. vs. PAP Ltd. Co. (Phil. Br.) G.. !o. "0084$ Au%ust "0&' oic* Conceal+ent$ escission o, Insurance Contract$ Alteration in the use o, the thin% insured Ponente* Mendo-a$ . /octrine* nder the Insurance Code o, the Philiines* “Sec. 26. A neglect to communicate that which a party knows and ought to communicate, is called a concealment. Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance. (As amended y !atasang "amansa !lg. #7$% Sec. &6#. An alteration in the use or condition of a thing insured from that to which it is limited y the policy made without the consent of the insurer, y means within the control of the insured, and increasing the risks, entitles an insurer to rescind a contract of 're insurance. 1acts* 1. 13 May 1996- Malayan Insurance Company (Malayan) (Malayan) issued Fire Insurance Policy to PAP Co., td. (PAP Co) !or t"e latter#s mac"ineries and e$uipment located at %anyo Precision Precision P"ils, &ld'., P"ase III, II I, ot , &loc 1*, P+A, osario, Caite (%anyo &uildin'). /. Insurance 0as 0ort" P1*M and eectie eectie !or 1 year. year. It 0as procured procured 2y PAP Co !or C&C, t"e mort'a'ee o! t"e insured mac"ineries and e$uipment. 3. Prior to epiration o! t"e insurance coera'e, coera'e, PAP PAP Co. rene0ed rene0ed policy on an 4as is5 2asis. "is 0as !or 13 May 1997 to 13 May 1998. . 1/ cto2er 1997 and durin' t"e su2sistence o! t"e rene0al rene0al policy, t"e insured mac"ineries and e$uipment 0ere totally lost 2y :r. *. PAP Co. :led :led a :re insurance insurance claim 0it" 0it" Malayan in t"e amount insured. 6. 1* ;ecem2er ;ecem2er 19971997- Malayan Malayan denied denied since since at t"e time time o! loss, t"e t"e insured mac"ineries and e$uipment 0ere trans!erred 2y PAP Co. to a location dierent !rom t"at indicated in t"e policy. 7. PAP Co. ar'ued t"at Malayan cannot aoid lia2ility lia2ility since it it 0as in!ormed o! t"e trans!er 2y C&C, t"e mort'a'e and t"e party duty2ound to relay suc" in!ormation.
8. 17 %eptem2er /<<9/<<9- C C ordered ordered Malayan to pay PAP PAP an indemnity !or t"e loss. 9. /7 cto2er /<11- CA a=rmed a=rmed C decision. >ence >ence t"is case.
Issue* Is Malayan lia2le under t"e insurance contract? ulin%* @o. nder t"e policy and 0"en it 0as rene0ed, it !or2ade t"e remoal o! t"e insured properties unless sanctionedBconsented 2y Malayan. PAP !ailed to noti!y and to o2tain consent o! Malayan re'ardin' t"e remoal. "e trans!er also increased increased t"e ris. it" t"e trans!er trans!er o! location o! t"e su2Dect properties, 0it"out notice to and consent o! Malayan, PAP PAP committed concealment, misrepresentation and 2reac" o! a material 0arranty. nder t"e Insurance Code, Malayan can rescind t"e insurance contract. /isositive* >++F+, t"e cto2er /7, /<11 ;ecision o! t"e Court o! Appeals is "ere2y +E+%+; and %+ A%I;+. Petitioner Petitioner Malayan Insurance Company, Inc. is "ere2y declared @ lia2le !or t"e loss o! t"e insured mac"ineries and e$uipment suered 2y PAP Co., td.
