INSURANCE_FINALS
2. In November 1925, Santa Ana mortgaged this house to Garcia for
WARRANTIES
Sec. 67. A warranty is either expressed or implied.
Sec. 68. A warranty may relate to the past, the present, the future, or to any
or all of these.
Sec. 69. No particular form of words is necessary to create a warranty.
Sec. 70. Without prejudice to section fifty-one, every express warranty, made
at or before the execution of a policy, must be contained in the policy itself, or
in another instrument signed by the insured and referred to in the policy as
making a part of it.
Sec. 71. A statement in a policy of matter relating to the person or thing
insured, or to the risk, as a fact, is an express warranty thereof.
Sec. 72. A statement in a policy which imparts that it is intended to do or not
to do a thing which materially affects the risk, is a warranty that such act or
omission shall take place.
Sec. 73. When, before the time arrives for the performance of a warranty
relating to the future, a loss insured against happens, or performance becomes
unlawful at the place of the contract, or impossible, the omission to fulfill the
warranty does not avoid the policy.
Sec. 74. The violation of a material warranty, or other material provision of a
policy, on the part of either party thereto, entitles the other to rescind.
Sec. 75. A policy may declare that a violation of specified provisions thereof
shall avoid it, otherwise the breach of an immaterial provision does not avoid
the policy.
Sec. 76. A breach of warranty without fraud merely exonerates an insurer from
the time that it occurs, or where it is broken in its inception, prevents the policy
from attaching to the risk.
Sta. Ana v Commercial Union lnsurance
Facts:
1. In 1923, Sta. Ana built his house in Pasig and insured it against fire for
(1) P3,000 to Phoenix Assurance Company and (2) P6,000 to Guardian
Assurance Company, Limited, for a period of one year.
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P5,000, for a period of two years, the contract being drawn up as a retro
sale for the sum of P5,000. The 2 policies were endorsed to Garcia.
3. In December 1925, Santa Ana reinsured said house with the defendant
companies, the Globe and Rutgers Fire Insurance Company of New York,
and the Commercial Union Assurance Company Limited of London, thr
ough their common agent duly authorized to represent them in the
Philippine Islands, the Pacific Commercial Company which was to be
effective for one year.
4. On September 20, 1926, Santa Ana took out another insurance policy
on the house in question for P6,000 in the "Filipinas, Compania de
Seguros, which issued the one-year policy upon receiving from Sta. Ana
premium thereon.
5. Twelve hours before the expiration of the policies issued by the Phoenix
Assurance Company and the Guardian Assurance Company, Limited for
P3,000 and P6,000 respectively, the entire house was burned.
6. Santa Ana gave notice in due time of the loss to each and every one
of the companies in which he had insured the house and demanded pa
yment of the respective policies.
7. The insurance companies refused payment on the ground that the claim
of P21,000 filed by him was fraudulent, being in excess of the real value
of the insured property; that none of said companies had been informed
of the existence of the other policies in the other companies, and that
the fire was intentional.
8. Sta.
Ana filed civil cases in RTC against The Commercial Union AssuranceCo
mpany, Limited in case No. 31263; the Globe and Rutgers Fire Insurance
Company of New York in case No. 31264; and the Phoenix Assurance
Company, Limited, the Guardian Assurance Company, Limited, and the
"Filipinas, Compania de Seguros", incase No. 31322. All the defendants
are absolved in their alleged liabilities by the RTC. Hence this petition.
ISSUE:Can the insured claim against the insurance companies?
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
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to render an insurance valid which requires such notice, whether oral or
written, the SC held 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. Since the policy is null and void, plaintiff cannot
recover from the defendants insurance companies.
 The SC upheld the finding of the trial court that the policies provide that
no other insurance should be admitted upon the property thereby
assured without the consent of said companies duly given by
endorsement.
Ang Giok Chip v Springfield Fire & Marine
Facts: Ang insured his warehouse for the total value of Php 60,000. One of
these, amounting to 10,000, was with Springfield Insurance Company. His
warehouse burned down, then he attempted to recover 8,000 from Springfield
for the indemnity. The insurance company interposed its defense on a rider in
the policy in the form of Warranty F, fixing the amount of hazardous good that
can be stored in a building to be covered by the insurance. They claimed that
Ang violated the 3 percent limit by placing hazardous goods to as high as 39
percent of all the goods stored in the building. His suit to recover was granted
by the trial court. Hence, this appeal.
Issue: Whether a warranty referred to in the policy as forming part
of the contract of insurance and in the form of a rider to the insurance
policy, is null and void because not complying with the Philippine
Insurance Act.
Held: No. The warranty is valid. Petition dismissed.
Ratio: The Insurance Act, Section 65, taken from California law, states:
"Every express warranty, made at or before the execution of a policy,
must be contained in the policy itself, or in another instrument signed by the
insured and referred to in the policy, as making a part of it."
Warranty F, indemnifying for a value of Php 20,000 and pasted on the
left margin of the policy stated:
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It is hereby declared and agreed that during the currency of this policy
no hazardous goods be stored in the Building to which this insurance applies
or in any building communicating therewith, provided, always, however, that
the Insured be permitted to stored a small quantity of the hazardous goods
specified below, but not exceeding in all 3 per cent of the total value of the
whole of the goods or merchandise contained in said warehouse, viz; . . . .
Also, the court stated a book that said, "any express warranty or
condition is always a part of the policy, but, like any other part of an express
contract, may be written in the margin, or contained in proposals or documents
expressly referred to in the policy, and so made a part of it."
“It is well settled that a rider attached to a policy is a part of the contract,
to the same extent and with like effect as it actually embodied therein. In the
second place, it is equally well settled that an express warranty must appear
upon the face of the policy, or be clearly incorporated therein and made a part
thereof by explicit reference, or by words clearly evidencing such intention.”
The court concluded that Warranty F is contained in the policy itself,
because by the contract of insurance agreed to by the parties it was made to
be a part. It wasn’t aseparate instrument agreed to by the parties.
The receipt of the policy by the insured without objection binds him. It
was his duty to read the policy and know its terms. He also never chose to
accept a different policy by considering the earlier one as a mistake. Hence,
the rider is valid.
Young v Midland Textile
Facts: Young owned a candy and fruit store in Manila. Midland issued a policy
for the payment of a premium of P60. The indemnity was 3,000 if the place
was destroyed by fire. One clause claimed:
“Waranty B. – It is hereby declared and agreed that during the pendency
of this policy no hazardous goods stored or kept for sale, and no hazardous
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trade or process be carried on, in the building to which this insurance applies,
or in any building connected therewith.”
Young then placed three boxes of fireworks. The plaintiff intended to
use them for Chinese New Year, but the authorities prohibited the use. The
bodega was destroyed by fire.
Both of the parties agree that said fireworks come within the phrase
“hazardous goods,” mentioned in said “warranty B” of the policy. But it was
found out that the fireworks were found in a part of the building not destroyed
by the fire, and that they in no way contributed to the fire.
Issue: Whether or not the placing of said fireworks in the building
insured is a violation of the terms of the contract of insurance and
especially of “warranty B”
Held: Yes. Petition dismissed.
Ratio: Both the plaintiff and defendant agree that if they were
“hazardous goods,” and if they were “stored,” then the act of the plaintiff was
a violation of the terms of the contract of insurance and the defendant was
justified in repudiating its liability.
This leads us to a consideration of the meaning of the accord “stored”
as used in said “warranty B.” Whether a particular article is “stored” or not
must, in some degree, depend upon the intention of the parties. Nearly all of
the cases cited by the lower court are cases where the article was being put to
some reasonable and actual use, which might easily have been permitted by
the terms of the policy, and within the intention of the parties, and excepted
from the operation of the warranty, like the present.
The author of the Century Dictionary defines the world “store” to be a
deposit in a store or warehouse for preservation or safe keeping; o place in a
warehouse or other place of deposit for safe keeping.
Said definitions, of course, do not include a deposit in a store, in small
quantities, for daily use. “Daily use” precludes the idea of a deposit for
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preservation or safe keeping, as well as a deposit for future consumption, or
safe keeping.
The plaintiff makes no claim that he deposited them there with any other
idea than “for future use” – for future consumption. It seems clear to us that
the “hazardous goods” in question were “stored” in the bodega, as that word
is generally defined. That being true, suppose the defendant had made an
examination of the premises, even in the absence of a fire, and had found the
“hazardous goods” there, under the conditions above described, would it not
have been justified, then and there, in declaring the policy null and of no effect
by reason of a violation of its terms?
The appellant argues, however, that in view of the fact that the “storing”
of the fireworks on the premises of the insured did not contribute in any way
to the damage occasioned by the fire, he should be permitted to recover – that
the “storing” of the “hazardous goods” in no way caused injury to the defendant
company. The “storing” was a violation of the terms of the contract by virtue
of the provisions of the policy itself, terminated the contractual relations.
The plaintiff paid a premium based upon the risk at the time the policy
was issued. Certainly it cannot be denied that the placing of the firecrackers in
the building insured increased the risk. The plaintiff had not paid a premium
based upon the increased risk, neither had the defendant issued a policy upon
the theory of a different risk. The plaintiff was enjoying, if his contention may
be allowed may be allowed, the benefits of an insurance policy upon one risk,
whereas, as a matter of fact, it was issued upon an entirely different risk. The
defendant had neither been paid nor had issues a policy to cover the increased
risk. An increase of risk which is substantial and which is continued for a
considerable period of time, is a direct and certain injury to the insurer, and
changes the basis upon which the contract of insurance rests.
American Home Assurance v Tantuco
FACTS: Tantuco Enterprises, Inc. is a coconut oil milling and refining
company. It owned two mills (the first oil mill and a new one), both located
at its factory compound at Iyam, Lucena City. The two oil mills are
separately covered by fire insurance policies issued by American Home
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Assurance Co.
On Sept. 30, 1991, a fire broke out and gutted and consumed the new oil
mill. American Home rejected the claim for the insurance proceeds on the
ground that no policy was issued by it covering the burned oil mill. It stated
that the new oil mill was under Building No. 15 while the insurance coverage
extended only to the oil mill under Building No. 5.
ISSUE:
o Whether or not the new oil mill is covered by the fire
insurance policy
HELD: In construing the words used descriptive of a building insured,
the greatest liberality is shown by the courts in giving effect to the insurance.
In view of the custom of insurance agents to examine buildings before writing
policies upon them, and since a mistake as to the identity and character of the
building is extremely unlikely, the courts are inclined to consider the policy of
insurance covers any building which the parties manifestly intended to insure,
however inaccurate the description may be.
Notwithstanding, therefore, the misdescription in the policy, it is beyond
dispute, to our mind, that what the parties manifestly intended to insure was
the new oil mill.
If the parties really intended to protect the first oil mill, then there is no
need to specify it as new. Indeed, it would be absurd to assume that the
respondent would protect its first oil mill for different amounts and leave
uncovered its second one.
Qua Chee Gan v Law Union & Rock lnsurance
FACTS:
 Qua Chee Gan, a merchant of Albay, owned four bodegas which he
insured with Law Union & Rock Insurance Co., Ltd (Law Union) since
1937 and the lose made payable to the Philippine National Bank (PNB)
as mortgage of the hemp and crops, to the extent of its interest
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 July 21, 1940 morning: fire broke out in bodegas 1,2 and 4 which lasted
for almost a week.
o Qua Chee Gan informed Law Union by telegram
 Law Union rejected alleging that it was a fraudulent claim that the fire
had been deliberately caused by the insured or by other persons in
connivance with him
 Que Chee Gan, with his brother, Qua Chee Pao, and some employees of
his, were indicted and tried in 1940 for the crime of arson but
was subsequently acquitted
 During the pendency of the suit, Que Chee Gan paid PNB
 Law Union states that ff. assignment of errors:
o 1. memo of warranty requires 11 hydrants instead of 2
o 2. violation of hemp warranty against storage of gasoline since it
prohibits oils
o 3. fire was due to fraud
o 4. burned bodegas could not possibly have contained the
quantities of copra and hemp stated in the fire claims
ISSUE: W/N Qua Chee Gan should be allowed to claim.
HELD: YES. Affirmed.
 1. It is a well settled rule of law that an insurer which with knowledge
of facts entitling it to treat a policy as no longer in force, receives and
accepts a preium on the policy, estopped to take advantage of the
forfeiture
 2. oils (animal and/or vegetable and/or mineral and/or their liquid
products having a flash point below 300o Fahrenheit", and is decidedly
ambiguous and uncertain; for in ordinary parlance, "Oils" mean
"lubricants" and not gasoline or kerosene
o by reason of the exclusive control of the insurance company over
the terms and phraseology of the contract, the ambiguity must
be held strictly against the insurer and liberraly in favor of the
insured, specially to avoid a forfeiture
 3. trial Court found that the discrepancies were a result of the insured's
erroneous interpretation of the provisions of the insurance policies and
claim forms, caused by his imperfect knowledge of English, and that the
misstatements were innocently made and without intent to defraud.
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 4. Similarly, the 20 per cent overclaim on 70 per cent of the hemo stock,
was explained by the insured as caused by his belief that he was entitled
to include in the claim his expected profit on the 70 per cent of the
hemp, because the same was already contracted for and sold to other
parties before the fire occurred
Fieldman's lnsurance v Songco
Facts:
> In 1960, Sambat, an agent of Fieldman’s Insurance, induced Songco, a man
of scant education to enter into a common carrier insurance contract with
Fieldman.
> During the inducement, a son of Songco butted in and said that they could
not accept the type of insurance offered because theirs was an owner-type
jeepney and not a common carrier.
> Sambat answered that it did not matter because the insurance company
was not owned by the government and therefore had nothing to do with rules
and regulations of the latter (Fieldman).
> The insurance was executed and approved for a year from Sept. 1960-
1961. It was renewed in 1961 for another year.
> In Oct. 1961, the jeepney collided with a car in Bulacan and as a result,
Sonco died. The remaining members of the family claimed the proceeds of the
insurance with the company but it refused to pay on the ground that the vehicle
was not a common carrier.
Issue: Whether or not the Songcos’ can claim the insurance proceeds
despite the fact that the vehicle concerned was an owner and not a
common carrier.
Held:
Yes. The company is estopped from asserting that the vehicle was not covered.
After it had led Federico Songco to believe that he could qualify under the
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common carrier liability insurance policy, and to enter into a contract of
insurance paying the premiums due, it could not thereafter be permitted to
change its stand to the detriment of the heirs of the insured. It knew all along
that Frederico owned a private vehicle. Its agent Sambat twice exerted the
utmost pressure on the insured, a man of scant education, and the company
did not object to this.
Pioneer lnsurance v Yap
Facts: Respondent Oliva Yap was the owner of a store in a two-storey
building where she sold shopping bags and footwear. Chua Soon Poon, her
son-in-law, was in charge of the store.
Yap took out a Fire Insurance Policy No. 4216 from Pioneer Insurance
with a value of P25,000.00 covering her stocks, office furniture, fixtures and
fittings.
Among the conditions in the policy executed by the parties are the
following: 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… Any false declaration or breach or this condition will
render this policy null and void.
Another insurance policy for P20,000.00 issued by Great American
covering the same properties. The endorsement recognized co-insurance by
Northwest for the same value.
Oliva Yap took out another fire insurance policy for P20,000.00 covering
the same properties from the Federal Insurance Company, Inc., which was
procured without notice to and the written consent of Pioneer.
A fire broke out in the building, and the store was burned. Yap filed an
insurance claim, but the same was denied for a breach.
Oliva Yap filed a case for payment of the face value of her fire insurance
policy. The insurance company refused to pay because she never informed
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Pioneer of another insurer. The trial court decided in favor of Yap. The CA
affirmed.
Issue: Whether or not petitioner should be absolved from liability on
the Pioneeer policy on account of any violation of the co-insurance
clause
Held: No. Petition dismissed.
Ratio: There was a violation. The insurance policy for P20,000.00 issued
by the Great American, ceased to be recognized by them as a co-insurance
policy.
The endorsement shows the clear intention of the parties to recognize
on the date the endorsement was made, the existence of only one co-
insurance, the Northwest one. The finding of the Court of Appeals that the
Great American Insurance policy was substituted by the Federal Insurance
policy is indeed contrary to said stipulation.
Other insurance without the consent of Pioneer would avoid the
contract. It required no affirmative act of election on the part of the company
to make operative the clause avoiding the contract, wherever the specified
conditions should occur. Its obligations ceased, unless, being informed of the
fact, it consented to the additional insurance.
The validity of a clause in a fire insurance policy to the effect that the
procurement of additional insurance without the consent of the insurer renders
the policy void is in American jurisprudence.
Milwaukee Mechanids' Lumber Co., vs. Gibson- "The rule in this state
and practically all of the states is to the effect that a clause in a policy to the
effect that the procurement of additional insurance without the consent of the
insurer renders the policy void is a valid provision.”
In this jurisdiction, General Insurance & Surety Corporation vs. Ng Hua-
“The annotation then, must be deemed to be a warranty that the property was
not insured by any other policy. Violation thereof entitled the insurer to rescind.
Furthermore, even if the annotations were overlooked the defendant insurer
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would still be free from liability because there is no question that the policy
issued by General Indemnity has not been stated in nor endorsed on Policy No.
471 of defendant. The obvious purpose of the aforesaid requirement in the
policy is to prevent over-insurance and thus avert the perpetration of fraud
where a fire would be profitable to the insured.“
Prudential Guarantee v Trans Asia
Principle found in the case: Section 343 and 344 applies when there
is unreasonable delay or refusal in the payment of the insurance claims which
could force the insured to file a case thus entitling him of attorney’s fees.
Facts: TRANS-ASIA is the owner of the vessel M/V Asia Korea. In
consideration of payment of premiums, PRUDENTIAL insured M/V Asia Korea
for loss/damage of the hull and machinery arising from perils, inter alia, of fire
and explosion for the sum of P40 Million, beginning from the period of July 1,
1993 up to July 1, 1994.
On October 25, 1993, while the policy was in force, a fire broke out while
[M/V Asia Korea was] undergoing repairs at the port of Cebu. On October 26,
1993 TRANS-ASIA filed its notice of claim for damage sustained by the vessel
evidenced by a letter/formal claim.
TRANS-ASIA reserved its right to subsequently notify PRUDENTIAL as
to the full amount of the claim upon final survey and determination by average
adjuster Richard Hogg International (Phil.) of the damage sustained by reason
of fire. TRANS-ASIA executed a document denominated “Loan and Trust
receipt”, a portion of which states that “Received from Prudential Guarantee
and Assurance, Inc., the sum of PESOS THREE MILLION ONLY (P3,000,000.00)
as a loan without interest under Policy No. MH 93/1353 [sic], repayable only in
the event and to the extent that any net recovery is made by Trans-Asia
Shipping Corporation, from any person or persons, corporation or corporations,
or other parties, on account of loss by any casualty for which they may be liable
occasioned by the 25 October 1993: Fire on Board.
“PRUDENTIAL later on denied Trans-Asia’s claim in stated in a letter
that “After a careful review and evaluation of your claim arising from the above-
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captioned incident, it has been ascertained that you are in breach of policy
conditions, among them “WARRANTED VESSEL CLASSED AND CLASS
MAINTAINED”. Accordingly, we regret to advise that your claim is not
compensable and hereby DENIED.” and asked for the return of the
3,000,000. TRANS-ASIA filed a Complaint for Sum of Money against
PRUDENTIAL with the RTC of Cebu City, wherein TRANS-ASIA sought the
amount of P8,395,072.26 from PRUDENTIAL, alleging that the same
represents the balance of the indemnity due upon the insurance policy in the
total amount of P11,395,072.26.
TRANS-ASIA similarly sought interest at 42% per annum citing Section
243 of Presidential Decree No. 1460, otherwise known as the “Insurance Code,”
as amended. PRUDENTIAL denied the material allegations of the Complaint
and interposed the defense that TRANS-ASIA breached
insurance policy conditions, in particular: PRUDENTIAL posits that TRANS-
ASIA violated an express and material warranty in the subject insurance
contract, i.e., Marine Insurance Policy No. MH93/1363, specifically Warranty
Clause No. 5 thereof, which stipulates that the insured vessel, “M/V ASIA
KOREA” is required to be CLASSED AND CLASS MAINTAINED.
According to PRUDENTIAL, on 25 October 1993, or at the time of the
occurrence of the fire, “M/V ASIA KOREA” was in violation of the warranty as
it was not CLASSED AND CLASS MAINTAINED. PRUDENTIAL submits that
Warranty Clause No. 5 was a condition precedent to the recovery of TRANS-
ASIA under the policy, the violation of which entitled PRUDENTIAL to rescind
the contract under Sec. 74 of the Insurance Code. By way of a counterclaim,
PRUDENTIAL sought a refund of P3,000,000.00, which it allegedly advanced to
TRANS-ASIA by way of a loan without interest and without prejudice to the
final evaluation of the claim, including the amounts of P500,000.00, for survey
fees and P200,000.00, representing attorney’s fees. Trial court ruled in favor
of Prudential. It ruled that a determination of the parties’ liabilities hinged on
whether TRANS-ASIA violated and breached
the policy conditions on WARRANTED VESSEL CLASSED AND
CLASS MAINTAINED.
It interpreted the provision to mean that TRANS-ASIA is required to
maintain the vessel at a certain class at all times pertinent during the life of the
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policy. According to the court a quo, TRANS-ASIA failed to prove compliance
of the terms of the warranty, the violation thereof entitled PRUDENTIAL to
rescind the contract. The court of appeals reversed the decision.
It ruled that PRUDENTIAL, as the party asserting the non-
compensability of the loss had the burden of proof to show that TRANS-ASIA
breached the warranty, which burden it failed to discharge.It considered
PRUDENTIAL’s admission that at the time the insurance contract was entered
into between the parties, the vessel was properly classed by Bureau Veritas,
a classification society recognized by the industry. It similarly gave weight to
the fact that it was the responsibility of Richards Hogg International (Phils.)
Inc., the average adjuster hired by PRUDENTIAL, to secure a copy of such
certification to support its conclusion that mere absence of a certification does
not warrant denial of TRANS-ASIA’s claim under the insurance policy.
Also the C.A. ruled that TRANS-ASIA is entitled to the unpaid claims
covered by Marine Policy, or a total amount of P8,395,072.26 however even if
there was unreasonable denial or withholding of the payment of the claims due
Trans-Asia is still not entitled to pay for attorney’s fees for it can only
be awarded in the cases enumerated in Article 2208 of the Civil Code. But
Trans-Asia is entitled to double interest on the policy for the duration of the
delay of payment of the unpaid balance, citing Section 244 of the Insurance
Code.
Issue:
WON Prudential should pay Trans-Asia the unpaid claims covered by
the marine policy including attorney’s fees.
Ruling:
Yes
Rationale:
Sec. 244 of the Insurance Code grants damages consisting of attorney’
s fees and other expenses incurred by the insured after a finding by the
Insurance Commissioner or the Court, as the case may be,of an unreasonable
denial or withholding of the payment of the claims due.
Moreover, the law imposes an interest of twice the ceiling prescribed by
the Monetary Board on the amount of the claim due the insured from the date
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following the time prescribed in Section 242 or in Section 243, as the case may
be,until the claim is fully satisfied.
Finally, Section 244 considers the failure to pay the claims within the
time prescribed in Sections 242 or 243, when applicable, as prima facie
evidence of unreasonable delay in payment.
To the mind of this Court, Section 244 does not require a showing of
bad faith in order that attorney’s fees be granted.As earlier stated, under
Section 244, a prima facie evidence of unreasonable delay in payment of the
claim is created by failure of the insurer to pay the claim within the time fixed
in both Sections 242 and 243 of the Insurance Code.
As established in Section 244, by reason of the delay and the consequent
filing of the suit by the insured, the insurers shall be adjudged to pay damages
which shall consist of attorney’s fees and other expenses incurred by the
insured.
Section 244 reads:
“In case of any litigation for the enforcement of any policy or contract of
insurance, it shall be the duty of theCommissioner or the Court, as the case
may be, to make a finding as to whether the payment of the claim of theinsured
has been unreasonably denied or withheld; and in the affirmative case, the
insurance company shall beadjudged to pay damages which shall consist of
attorney’s fees and other expenses incurred by the insured personby reason of
such unreasonable denial or withholding of payment plus interest of twice the
ceiling prescribed by theMonetary Board of the amount of the claim due the
insured, from the date following the time prescribed in sectiontwo hundred
forty-two or in section two hundred forty-three, as the case may be, until the
claim is fully satisfied;Provided, That the failure to pay any such claim within
the time prescribed in said sections shall be considered primafacie evidence of
unreasonable delay in payment.”
Sections 243 and 244 of the Insurance Code apply when the court finds
an unreasonable delay or refusal in the payment of the insurance claims.
In the case at bar, the facts as found by the Court of Appeals, and
confirmed by the records show that there was an unreasonable delay by
PRUDENTIAL in the payment of the unpaid balance of P8,395,072.26 to
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TRANS-ASIA. On 26 October 1993, a day after the occurrence of the fire in
“M/V Asia Korea”, TRANS-ASIA filed its notice of claim.
On 13 August 1996, the adjuster, Richards Hogg International (Phils.),
Inc., completed its survey report recommending the amount of P11,395,072.26
as the total indemnity due to TRANS-ASIA. On 21 April 1997, PRUDENTIAL, in
a letter addressed to TRANS-ASIA denied the latter’s claim for the amount of
P8,395,072.26 representing the balance of thetotal indemnity. On 21 July 1997,
PRUDENTIAL sent a second letter to TRANS-ASIA seeking a return of the
amount of P3,000,000.00. On 13 August 1997, TRANS-ASIA was constrained
to file a complaint for sum of money against
PRUDENTIAL praying, inter alia, for the sum
of P8,395,072.26 representing the balance of the proceeds of the
insurance claim.
As can be gleaned from the foregoing, there was an unreasonable delay
on the part of PRUDENTIAL to pay TRANS-ASIA, as in fact, it refuted the latter’s
right to the insurance claims, from the time proof of loss was shown and the
ascertainment of the loss was made by the insurance adjuster.
Evidently, PRUDENTIAL’s unreasonable delay in satisfying TRANS-
ASIA’s unpaid claims compelled the latter to file a suit for collection.Succinctly,
an award equivalent to ten percent (10%) of the unpaid proceeds of the policy
as attorney’s fees to TRANS-ASIA is reasonable under the circumstances, or
otherwise stated, ten percent (10%) of P8,395,072.26.
In the case of Cathay Insurance, Co., Inc. v. Court of Appeals, where a
finding of an unreasonable delay under Section 244 of the Insurance Code was
made by this Court, we grant an award of attorney’s fees equivalent to ten
percent (10%) of the total proceeds. We find no reason to deviate from this
judicial precedent in the case at bar.
General Insurance v Ng Hua
Facts: On April 15, 1952, the defendant General Insurance and 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
INSURANCE_FINALS

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 P10,000.00; but after some
negotiations and upon suggestion of the Manila Adjustment Company, he
reduced the claim of 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 (f) failure to pay the
premium.
The aforesaid Policy No. 471 contains this stipulation on the back
thereof;.
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.
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 Policy No. 471 of defendant. And as stipulated in the above-quoted
provisions of such policy "all benefit under this policy shall be forfeited."

3. 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 CA affirmed. Hence, the petition.

ISSUE:
1. Whether or not General Insurance can refuse to pay the
proceeds.
2. W/N Co-Insurance exist as to the plaintiff

HELD:

1. Yes. Violation of the statement which is to be considered a warranty

entitles the insurer to rescind the contract of insurance. Such
misrepresentation is fatal.
2. No. 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.1 And considering the terms of the policy
which required the insured to declare other insurances, the statement

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