Insurance Law: Insurable Interest
GENERAL INSURANCE & SURETY CORPORATION (GISC), petitioner, vs. NG HUA, respondent.
January 30, 1960 G.R. No. L-14373 Bengzon, J
Provisions/Concepts/Doctrines (how applied to the case)
See ruling below.
FACTS
GISC issued its Insurance Policy No. 471, insuring against fire, for one
year, the stock in trade of the Central Pomade Factory owned by Ng Hua
(insured).
The Pomade Factory burned, resulting in destruction by fire of the insured
property.
Ng Hua claimed indemnity which was refused by GISC for the following
reasons:
a. Action was not filed on time
b. Violation of warranty
c. Submission of fraudulent claim, and
d. Failure to pay the premium.
It was undenied that Ng Hua had previously obtained fire insurance on
the same goods for the same period from General Indemnity Co.
Court of Appeals (CA), referring to the annotation and overruling the defense,
held there was NO VIOLATION of the clause, inasmuch as “co-insurance exists
when a condition of the policy requires the insured to bear ratable proportion of
the loss when the value of the insured property exceeds the face value of the
policy”, hence there is no co-insurance here.
Hence, this petition.
ISSUE/S (relevant to the syllabus)
Whether Ng Hua violate the warranty by failing to disclose the existence of another fire
insurance policy on the same property., thereby entitling the insurer to rescind the policy due to
alleged breach of warranty and concealment of other insurance. - YES
RULING (how the law was applied)
The Supreme Court (SC) held that Ng Hua violated the warranty by failing to disclose the
existence of another fire insurance policy on the same property and that GISC is entitled to
rescind the policy due to the breach of warranty and concealment of other
insurance.
The SC ruled that the annotation "Co-Insurance Declared NIL" on the face of the
policy must be interpreted as a warranty that there were no other insurance
policies on the property. This interpretation aligns with the policy's stipulation
requiring the insured to declare any other insurance policies. The Court of
Appeals' interpretation that co-insurance only exists when the insured must bear
a ratable proportion of the loss was deemed too narrow. The Supreme Court
clarified that co-insurance can also refer to other insurers covering the same
property against the same hazard. The failure to disclose the additional
insurance with General Indemnity Co. constituted a breach of warranty, entitling
the insurer to rescind the policy under Section 69 of the Insurance Act. The
Court also noted that there was no evidence to support Ng Hua's claim that
General Insurance had actual knowledge of the additional insurance before
issuing its policy or before the fire occurred. Consequently, the insurer's defense
of breach of warranty and concealment was upheld, leading to the revocation of
the lower court's judgment and the acquittal of the insurer from all liability
under the policy.
DISPOSITIVE
WHEREFORE, the judgment under review will be revoked, and the defendant
insurer (herein petitioner) acquitted from all the liability under the policy. Costs
against respondent.
So ordered.
ADDITIONAL NOTES
Policy 471 contains this stipulation printed on the back:
“3. 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 hereby
insured, and unless such notice be given and the particulars of such insurances be stated
in or endorsed on this Policy by or on behalf of the Company before the concurrence of
any loss or damages, all benefits under this Policy shall be forfeited.”
