also pay.
The same treatment was given him by the other insurance
Concealment
24. NEW LIFE ENTERPRISES AND JULIAN SY VS. CA
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
FACTS
1. 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.
2. 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.
3. Acquired fire insurance from 3 different 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.
4. 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.
5. 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 in nature.
6. 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.
7. He averred that in support of his claim, he submitted the fire clearance,
the insurance policies and inventory of stocks.
8. Insurance companies- Denial of Claim: Julian Sy further testified that the
three insurance companies are sister companies, 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
companies. Ultimately, the three insurance companies denied plaintiffs'
claim for payment.
9. 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.
10. Denial of Claim -Non-Disclosure of Previous Insurance on said goods
11. Admission of non-disclosure that it co-insure said 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
12. 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.
13. 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.
14. Petitioner should have express his disagreement with the said insurance
contract
15. 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
1. 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.
 2. Sy never disclosed co-insurance in the contracts he entered into 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.
3. When the words of the document are readily understandable by an
ordinary reader, there is no need for construction anymore.
4. The conformity of the insured to the terms of the policy is implied with
his failure to disagree with the terms of the contract.
5. Since Sy, was a businessman, it was incumbent upon him to read the
contracts.
6. In Pioneer Insurance and Surety Corporation vs. Yap, 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.
7. “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 . . .”
8. As for condition number 27, the stipulation 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.
9. 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.