General lnsurance v Ng Hua
Double Insurance
FACTS:
1. Defendant General Insurance and Surety Corporation issued its insurance policy insuring against fire, for one year, the stock in
trade of the Central Pomade Factory owned by Ng Hua, the court 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 P10K; but after some negotiations and upon suggestion of the Manila Adjustment Company, he reduced the claim
of P5K. 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 (f) failure to pay the premium.
The said policy contains the stipulation:
“The insured shall give notice to the company of any insurance or insurances already affected, 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 the policy shall be forfeited.”
The face of the policy bore the annotation: "Co-Insurance Declared — NIL"
2. A suit was filed in the CFI to recover on a fire insurance policy. After trial, it was required to pay. On appeal to the CA, the
judgment was affirmed.
ISSUE: WON there was double insurance? NO
RULING:Ng Hua had obtained fire insurance on the same goods, for the same period of time, in the amount of P20Kfrom
General Indemnity Co. However, the CA referring to the annotation and overruling the defense, held that 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.
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 co-insurance exists. Other insurers of the same property against the same hazard are sometimes
referred as co-insurers 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 that the CA 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. The materiality of non-disclosure of other
insurance policies is not open to doubt.
Furthermore, even if the annotations were overlooked, the defendant insurer would still be free from liability because there is no
question that the policy issued by General Indemnity had not been stated in nor endorsed on the policy of defendant. And as
stipulated in the above-quoted provisions of such policy "all benefit under this policy shall be forfeited."
To avoid the dissastrous 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, such knowledge might overcome the insurer's defense. However, the CA found no evidence of such knowledge. As to
knowledge of General Insurance before issuance of its policy or the fire, there was none.
