Union Manufacturing Co., Inc. vs.
Philippine Guaranty Co., Inc.
(Insurance Law)
47 SCRA 271 (G.R. No. L-27932)
October 30, 1972
Petitioners:
|
Republic
Bank
|
Respondents:
|
Philippine
Guaranty Co., Inc.
|
J.
Fernando:
FACTS:
On
January 12, 1962, the Union Manufacturing Co., Inc. obtained certain loans from
the Republic Bank in the total sum of ₱415,000.00.
To secure the payment thereof, UMC executed real and chattel mortgage on
certain properties.
The
Republic Bank procured from the defendant Philippine Guaranty Co., Inc. an
insurance coverage on loss against fire for ₱500,000.00
over the properties of the UMC, as described in defendants cover note dated
September 25, 1962, with the annotation that loss or damage, if any, under said
Cover Note is payable to Republic Bank as its interest may appear, subject
however to the printed conditions of said defendants’ Fire Insurance Policy
Form.
On
September 6, 1964, a fire occurred in the premises of UMC and on October 6,
1964, UMC filed its fire claim with the PGC Inc., thru its adjuster, H. H.
Bayne Adjustment Co., which was denied by said defendant in its letter dated
November 26, 1964 on the following ground: “Policy Condition No. 3 and/or the
other Insurance Clause of the policy was violated because you did not give
notice to us of the other insurance which you had taken from New India for ₱
80,000.00. Sincere Insurance for ₱
25,000.00 and Manila Insurance for ₱
200,000.00 with the result that these insurances, of which we became aware of
only after the fire were not endorsed on our policy.
ISSUE:
Whether
or not Republic Bank can recover.
HELD:
No.
Without deciding- whether notice of other insurance upon the same property must
be given in writing, or whether a verbal notice is sufficient to render an
insurance valid which requires such notice, whether oral or written, we hold
that in the absolute absence of such notice when it is one of the conditions
specified in the fire insurance policy, the policy is null and void. (Santa Ana
vs. Commercial Union Ass. Co., 55 Phil. 128).
If
the insured has violated or failed to perform the conditions of the contract,
and such a violation or want of performance has not been waived by the insurer,
then the insured cannot recover. Courts are not permitted to make contracts for
the parties. The functions and duty of the courts consist simply in enforcing
and carrying out the contracts actually made.
While
it is true, as a general rule, that contracts of insurance are construed most
favorably to the insured, yet contracts of insurance, like other contracts, are
to be construed according to the sense and meaning of the terms which the
parties themselves have used. If such terms are clear and unambiguous they must
be taken and understood in their plain, ordinary and popular sense.
The
annotation then, must be deemed to be a warranty that the property was not
insured by any other policy. Violation thereof entitles the insurer to rescind.
xxx The materiality of non-disclosure of other insurance policies is not open
to doubt.
The
insurance contract may be rather onerous, but that in itself does not justify
the abrogation of its express terms, terms which the insured accepted or
adhered to and which is the law between the contracting parties.
