PHILIPPINE REPORTS ANNOTATED VOLUME 106 24/08/2019, 9*18 AM

[No. L-14373. January 30, 1960]

GENERAL INSURANCE & SURETY CORPORATION,

petitioner, vs. NG HUA, respondent.

INSURANCE; CO-INSURANCE; BREACH OF

WARRANTY.·Violation of a warranty that there were no other
insurances on the property insured entitles the insurer to
rescind.

PETITION for review by certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
José P. Bengzon, Guido Advíncula and Potenciano Vil-
legas, Jr. for petitioner.
Crispín D. Baizas for respondent.

BENGZON, J.:

Suit to recover on a fire insurance policy. The insurer

presented several defenses in the Manila court of first
instance. After trial, it was required to pay.
On appeal to the Court of Appeals, the judgment was
affirmed.
This is now -a revision on certiorari, upon the insurer's
insistence on two of its main defenses: prescription and
breach of warranty.
The principal facts on which adjudication may rest are
these:
On April 15, 1952, the defendant General Insurance &
Surety Corporation 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, the

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1118 PHILIPPINE REPORTS ANNOTATED

Gen. Insurance & Surety Corp. vs. Ng Hua

insured. The next day, the Pomade Factory building

burned, resulting in destruction by fire of the insured
properties. Ng Hua claimed indemnity from the insurer.
The policy covered damages up to P10,000.00; but after
some negotiations and upon suggestion of the Manila
Adjustment Company, he reduced the claim to P5,000.00.
Nevertheless, the defendant insurer refused to pay for
various reasons, namely (a) action was not filed in time; (b)
violation of warranty; (c) submission of fraudulent claim;
and (d) failure to pay the premium.
The aforesaid Policy No. 471 contains this stipulation
printed on the back thereof;

"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 insurance or insurances be
stated in or endorsed on this Policy by or on behalf of the Company
before the occurrence of any loss or damage, all benefits under this
Policy shall be forfeited." (Italics Ours.)

The face of the policy bore the annotation: "Co-Insurance

Declared·NIL"
It is undenied that Ng Hua had obtained fire insurance
on the same goods, for the same period of time, in the
amount of P20,000.00 from General Indemnity Co.
However, the Court of Appeals, referring to the annotation
and overruling the defense, held there was no violation of
the above 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.
Discussion·Undoubtedly, co-insurance exists under the
condition described by the appellate court. But that is one
kind of co-insurance. It is not the only situation where
coinsurance exists. Other insurers of the same property

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VOL. 106, JANUARY 30, 1960 1119

Gen. Insurance & Surety Corp. vs. Ng Hua

against the same hazard are sometimes referred to as1

coinsurers and the ensuing combination as co-insurance.
And considering the terms of the policy which required the
insured to declare other insurances, the statement in
question must be deemed to be a statement (warranty)
binding on both insurer and insured, that there were no
other insurance on the property. Remember it runs "Co-
Insurance declared"; emphasis on the last word. If "Co-
insurance" means what the Court of Appeals says, the
annotation served no purpose. It would even be contrary to
the policy itself, which in its clause No, 17 made the insured
a co-insurer for the excess of the value of the property over
the amount of the policy.
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. (Sec. 69.
Insurance Act) Such misrepresentation is fatal in the light
of our views in Santa Ana vs. Commercial Union Assurance
Company, Ltd., 55 Phil. 329. The materiality of non-
disclosure of other insurance policies is not open to doubt.
Furthermore, even if the annotation were overlooked,
the defendant insurer would still be free from liability
because there is no question that the policy issued by

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1 Where the same person is insured by several insurers separately in

respect to the same subject and interest, there is double insurance under
our statute (sec. 86, Insurance Law). The situation is also sometimes
described in the texts and cases as concurrent insurance, additional or
other insurance, or coinsurance. See Ocean S. S. Co. vs. Aetna Ins. Co.,
121 Federal Reporter, 882, 887, Fidelity & Casualty Co. vs. Firemen's
Fund, 100 Pac. (2nd series) 364, 366. Textbooks and treatises in their
indexes, list additional insurance, other insurance, and concurrent
insurance under "co-insurance." See Vance on Insurance; Couch,
Cyclopedia on Insurance); Appelman-Law on Insurance. See specially
Vance on Insurance 2nd Ed. p. 78; Oppenheim vs. Firemen's Fund, 138
NW. 777 referred to special conditions in Minnesota.

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1120 PHILIPPINE REPORTS ANNOTATED

Gen. Insurance & Surety Corp. vs. Ng Hua

General Indemnity has not been stated in nor endorsed on

Policy No. 471 of defendant. And as stipulated in the above-
quoted provisions of such 2
policy "all benefit under this
policy shall be forfeited."
To avoid the disastrous effect of the misrepresentation or
concealment of the other insurance policy, Ng Hua alleges
"actual knowledge" on the part of General Insurance of the
fact that he had taken out additional insurance with
General Indemnity. He does not say when such knowledge
was acquired or imparted. If General Insurance knew
before issuing its policy or before the fire,
3
such knowledge
might overcome the insurer's defense. However, the Court
of Appeals found no evidence of such knowledge. We have
read the pages of the stenographic notes cited by Ng Hua
and all we gather is evidence of the existence of the
insurance with General Indemnity Company. As to
knowledge of General Insurance before issuance of its
policy or the fire, there was none.
Indeed, this concealment and violation was expressly set
up as a special defense in the answer. Yet plaintiff did not,
in avoidance, reply nor assert such knowledge. And it is
doubtful whether evidence on the point would be
admissible under the pleadings. (See Rule 11, sec. 1.)
All the above considerations lead to the conclusion that
the defendant insurer succesfully established its defense of
warranty breach or concealment of the other insurance
and/or violation of the provision of the policy
abovementioned.
Having reached this conclusion, we deem it unnecessary
to discuss the other defenses.
Wherefore, the judgment under review will be revoked,
and the defendant insurer (herein petitioner) acquitted

________________

2 A policy may declare that a violation of specified provisions thereof

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PHILIPPINE REPORTS ANNOTATED VOLUME 106 24/08/2019, 9*18 AM

shall avoid it. (sec. 70, Insurance Law).

3 La O vs. Yek Tong Lim Fire & Marine Insurance Co. 55 Phil., 386.

1121

VOL. 106, JANUARY 30, 1960 1121

Castillo, et al. vs. Hon. Bayona and Arzaga-Gallardo

from all the liability under the policy. Costs against

respondent. So ordered.

Parás, C. J., Padilla, Montemayor, Bautista, Angelo,

Labrador, Concepción, Reyes, J. B. L., Endencia, and
Barrera, JJ., concur.

Judgment revoked.

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