New Life Enterprises v.

CA
Topic: Concealment
CODE: Sec. 26 A neglect to communicate that which a party
knows and ought to communicate, is called a CONCEALMENT.
Summary: [BASA BASA MUNA INSYUUURENCE CONTRECT
BAGO PUMAYAG HINDI NIYA NABASA NA KELANGAN IDECLARE KUNG MAY PREVIOUSLY INSURED [ COINSURANCE] YUNG SAME OBJECT.
Note- In this case: pwede non-disclosure provided total
indemnity is not more than 200k
1. Petitioner- [FIRE INSURANCE ]co-insured (different
insurance companies) of the same stock/ goods of
the company
2. The warehouse burned down.
3. Petitioner claim was denied for failing to disclose
that said property was co-insured, upon
acquiring said insurance.
4. Said requirement of disclosure was stated in the
insurance policy of the insurance companies
5. Hence, such concealment , prevented the company
from claiming their insurance.
ISSUE- W/N Petitioner can claim NO, VIOLATION OF
INSURANCE POLICY NON DISCLOSURE THAT SAID
PROPERTY WAS CO-INSURED.
RATIO - The obvious purpose of the aforesaid
requirement in the policy is to prevent over-insurance 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. According to Justice Story: "The insured
has no right to complain, for he assents to comply
with all the stipulations on his side, in order to entitle himself to the
benefit of the contract, which, upon reason or principle, he
has no right to ask the court to dispense with the
performance of his own part of the agreement, and yet to
bind the other party to
obligations, which, but for those stipulations, would not have been
entered into."
Facts
6. The antecedents of this case show that 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.
7. The facts show that 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 from 3 different insurance
companies
8. On 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.
9. On 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.
10. On February 8, 1982, Equitable Insurance
Corporation issued Fire Insurance Policy No. 39328 in
the amount of P200,000.00.
Fire incident occurred
11. Thus, when the building occupied by the New Life
Enterprises was gutted by fire at about 2:00
o'clock in the morning of October 19, 1982, the
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
12. According to the certification issued by the
Headquarters, Philippine Constabulary /Integrated
National Police, Camp Crame, the cause of fire was
electrical in nature.
13. 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 hi

m to the office of the company so that he can file

his claim.
14. 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
15. He further testified that the three insurance
companies are sister companies, and as a matter of
fact when he was following-up his claim with
Equitable Insurance, the Claims Manager told him to
go first to Reliance Insurance and if said company
agrees to pay, they would 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
16. Reliance Insurance purveyed the same message in its
letter dated November 23,
1982and signed by Executive Vice-President Mary
Dee Co (Exhibit "C" No. 7-84) which said that
"plaintiff's claim is denied for breach of policy
conditions.
Denial of Claim -Non-Disclosure of Previous Insurance on
said goods
17. 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:
a.
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 behalf of the Company

before the occurrence of any loss or damage, all benefits
under this policy shall be deemed forfeited, force at
the time of loss or damage not more than P200,000.00.

Admission of non-disclosure that it co-insure said goods

18. Petitioners admit that the respective insurance polici
es
issued by private respondents did not state or endors
e thereon
the other insurance coverage obtained or subsequen
tly effected on the same stocks in trade for the loss
of which compensation is claimed by petitioners
19. 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 Argument
20. 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 insurancecoverage and that they were
not informed about the requirement that such other
or additional insurance should bestated in the
policy, as they have not even read policies.
Petitioner should have express his disagreement with the
said insurance contract
21. 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