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Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. L-36232 December 19, 1974
PIONEER INSURNCE ND SURET! CORPORTION, petitioner-
appellant
!s"
OLI" !P, re#re$e%&e' b( )er *&&or%e(-+%-,*c&, C-U SOON
POON respon#ent-appellee"
Eriberto D. Ignacio for petitioner-appellant.
Paculdo, Miranda, Marquez, Sibal & Associates for respondent-appellee.

.ERNNDE/, J.:p
$his is an appeal b% certiorari fro& the #ecision of the Court of 'ppeals #ate#
Dece&ber 1( 1)*+ in C'-,"R" No" -((()-R affir&ing the .u#g&ent of the
Court of /irst Instance of Manila 01ranch VI2 in Ci!il Case No" 53545 6hich
latter court #eclare# plaintiff Oli!a 7ap herein respon#ent entitle# to reco!er
fro& #efen#ant Pioneer Insurance 8 Suret% Corporation herein petitioner the full
a&ount of the #a&age in9uire# in Polic% No" 3+1) 6hich is P+5444"44 plus
1+: of sai# su& fro& the #ate of filing of the co&plaint until full pa%&ent in
a##ition to the su& of P(444"44 for attorne%;s fees an# costs"
Respon#ent Oli!a 7ap 6as the o6ner of a store in a t6o-store% buil#ing locate# at
No" 55( <uan =una Street Manila 6here in 1)(+ she sol# shopping bags an#
foot6ear such as shoes san#als an# step-ins" Chua Soon Poon Oli!a 7ap;s son-
in-la6 6as in charge of the store"
On 'pril 1) 1)(+ respon#ent 7ap too> out /ire Insurance Polic% No" 3+1( fro&
petitioner Pioneer Insurance 8 Suret% Corporation 6ith a face !alue of
P+5444"44 co!ering her stoc>s office furniture fi?tures an# fittings of e!er%
>in# an# #escription" '&ong the con#itions in the polic% e?ecute# b% the parties
are the follo6ing@
$he Insure# shall gi!e notice to the Co&pan% of an% insurance or insurances
alrea#% effecte# or 6hich &a% subse9uentl% be effecte# co!ering an% of the
propert% hereb% insure# an# unless such notice be gien and the particulars of
such insurance or insurances be stated in, or endorsed on this Polic! b! or on
behalf of the "o#pan! before the occurrence of an! loss or da#age, all benefits
under this Polic! shall be forfeited" 0e&phasis supplie#2
It is un#erstoo# that e?cept as &a% be state# on the face of this polic% there is no
other insurance on the propert% hereb% co!ere# an# no other insurance is allo6e#
e?cept b% the consent of the Co&pan% en#orse# hereon" 'n% false #eclaration or
breach or this con#ition 6ill ren#er this polic% null an# !oi#"
't the ti&e of the insurance on 'pril 1) 1)(+ of Polic% No" 3+1) in fa!or of
respon#ent 7ap an insurance polic% for P+4444"44 issue# b% the ,reat '&erican
Insurance Co&pan% co!ering the sa&e properties 6as note# on sai# polic% as co-
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insurance 0'nne? A1-EA2" =ater on 'ugust +) 1)(+ the parties e?ecute# E?hibit
A1-BA as an en#orse&ent on Polic% No" 3+1) stating@
It is hereb% #eclare# an# agree# that the co-insurance e?isting at present un#er
this polic% is as follo6s@ P+4444"44 C North6est Ins" and not as originall!
stated" 0e&phasis supplie#2
E?cept as !arie# b% this en#orse&ent all other ter&s an# con#itions re&ain
unchange#"
Still later or on Septe&ber +( 1)(+ respon#ent Oli!a 7ap too> out another fire
insurance polic% for P+4444"44 co!ering the sa&e properties this ti&e fro& the
/e#eral Insurance Co&pan% Inc" 6hich ne6 polic% 6as ho6e!er procure#
6ithout notice to an# the 6ritten consent of petitioner Pioneer Insurance 8 Suret%
Corporation an# therefore 6as not note# as a co-insurance in Polic% No" 3+1)"
't #a6n on Dece&ber 1) 1)(+ a fire bro>e out in the buil#ing housing
respon#ent 7ap;s abo!e-&entione# store an# the sai# store 6as burne#"
Respon#ent 7ap file# an insurance clai& but the sa&e 6as #enie# in petitioner;s
letter of Ma% 1* 1)(- 0E?hibit A,A2 on the groun# of Abreach an#Dor !iolation of
an% an#Dor all ter&s an# con#itionsA of Polic% No" 3+1)"
On <ul% 1* 1)(- Oli!a 7ap file# 6ith the Court of /irst Instance of Manila the
present co&plaint as>ing a&ong others for pa%&ent of the face !alue of her fire
insurance polic%" In its ans6er petitioner allege# that no propert% belonging to
plaintiff 7ap an# co!ere# b% the insurance polic% 6as #estro%e# b% the fireE that
7ap;s clai& 6as file# out of ti&eE an# that 7ap too> out an insurance polic% fro&
another insurance co&pan% 6ithout petitioner;s >no6le#ge an#Dor en#orse&ent
in !iolation of the e?press stipulations in Polic% No" 3+1) hence all benefits
accruing fro& the polic% 6ere #ee&e# forfeite#"
's alrea#% state# at the beginning of this opinion the trial court #eci#e# for
plaintiff Oli!a 7apE an# its .u#g&ent 6as affir&e# in full b% the Court of 'ppeals"
$he !ital issue in this appeal is 6hether or not petitioner shoul# be absol!e# fro&
liabilit% on /ire Insurance Polic% No" 3+1) on account of an% !iolation b%
respon#ent 7ap of the co-insurance clause therein" In resol!ing this proble& the
Court of 'ppeals state# in its #ecision@
5" $he plaintiff-appellee has not !iolate# the other insurance clause 0E?hibit 1-/2
of the insurance Polic% No" 3+1) that 6oul# .ustif% the #efen#ant-appellant as
insurer to a!oi# its liabilit% thereun#er" It appears on the face of sai# polic% that a
co-insurance in the a&ount of P+4444"44 6as secure# fro& the ,reat '&erican
Insurance an# 6as #eclare# b% the plaintiff-appellee an# recogniFe# b% the
#efen#ant-appellant" $his 6as later on substitute# for the sa&e a&ount an#
secure# b% the /e#eral Insurance Co&pan%" Chua Soon Poon on being cross-
e?a&ine# b% counsel for the #efen#ant-appellant #eclare# that the ,reat
'&erican Insurance polic% 6as cancelle# because of the #ifference in the
pre&iu& an# the sa&e 6as change# for that of the /e#eral 0t"s"n" hearing of
Dece&ber 1 1)(3 pp" -5--(2" Contrar% to the assertion of the #efen#ant-
appellant the ,reat '&erican Insurance polic% 6as not substitute# b% the
North6est Insurance polic%" 's a#&itte# b% the #efen#ant-appellant in its brief 0p"
352 the fire insurance polic% issue# b% the ,reat '&erican Insurance Co&pan%
for P+4444"44 0E?hibit 1-E2 6as cancelle# on 'ugust +) 1)(+" On the other
han# the fire insurance polic% issue# b% the North6est Insurance 8 Suret%
Co&pan% for P+4444"44 0E?hibit 1-B2 6as ta>en out on <ul% +- 1)(+" Go6 then
can the North6est Insurance polic% issue# on <ul% +- 1)(+ be consi#ere# as
ha!ing substitute# the ,reat '&erican polic% 6hich 6as cancelle# onl% on
'ugust +) 1)(+H $he #efen#ant-appellant can be consi#ere# to ha!e 6ai!e# the
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for&al re9uire&ent of in#orsing the polic% of co-insurance since there 6as
absolutel% no sho6ing that it 6as not a6are of sai# substitution an# preferre# to
continue the polic% 0,onFales =a O !s" 7e> $ong =in /ire an# Marine Insurance
Co" 55 Phil" -5(2" E!en assu&ing that the #efen#ant-appellant #i# not in#orse the
/e#eral Insurance polic% there is no 9uestion that the sa&e 6as onl% a
substitution an# #i# not in an% 6a% increase the a&ount of the #eclare# co-
insurance" In other 6or#s there 6as no increase in the ris> assu&e# b% the
#efen#ant-appellant"
Ie #o not agree 6ith the conclusion of the Court of 'ppeals"
$here 6as a !iolation b% respon#ent Oli!a 7ap of the co-insurance clause
containe# in Polic% No" 3+1) that resulte# in the a!oi#ance of petitioner;s liabilit%"
$he insurance polic% for P+4444"44 issue# b% the ,reat '&erican Insurance
Co&pan% co!ering the sa&e properties of respon#ent 7ap an# #ul% note# on
Polic% No" 3+1) as c-insurance cease# b% agree&ent of the parties 0E?hibit A1-
=A2 to be recogniFe# b% the& as a co-insurance polic%" $he Court of 'ppeals sa%s
that the ,reat '&erican Insurance polic% 6as substitute# b% the /e#eral Insurance
polic% for the sa&e a&ount an# because it 6as a &ere case of substitution there
6as no necessit% for its en#orse&ent on Polic% No" 3+1)" $his fin#ing as 6ell as
reasoning suffers fro& se!eral fla6s" $here is no e!i#ence to establish an# pro!e
such a substitution" If an%thing 6as substitute# for the ,reat '&erican Insurance
polic% it coul# onl% be the North6est Insurance polic% for the sa&e a&ount of
P+4444"44" $he en#orse&ent 0E?hibit A1-BA2 9uote# abo!e sho6s the clear
intention of the parties to recogniFe on the #ate the en#orse&ent 6as &a#e
0'ugust +) 1)(+2 the e?istence of onl% one co-insurance an# that is the
North6est Insurance polic% 6hich accor#ing to the stipulation of the parties
#uring the hearing 6as issue# on 'ugust +4 1)(+ 0t"s"n" <anuar% 1+ 1)(5 pp" --
32 an# en#orse# onl% on 'ugust +4 1)(+" $he fin#ing of the Court of 'ppeals
that the ,reat '&erican Insurance polic% 6as substitute# b% the /e#eral Insurance
polic% is unsubstantiate# b% the e!i#ence of recor# an# in#ee# contrar% to sai#
stipulation an# a#&ission of respon#ent an# is groun#e# entirel% on speculation
sur&ises or con.ectures hence not bin#ing on the Supre&e Court"
1
$he Court of 'ppeals 6oul# consi#er petitioner to ha!e 6ai!e# the for&al
re9uire&ent of en#orsing the polic% of co-insurance Asince there 6as absolutel%
no sho6ing that it 6as not a6are of sai# substitution an# preferre# to continue the
polic%"A $he fallac% of this argu&ent is that contrar% to Section 1 Rule 1-1 of the
Re!ise# Rules of Court 6hich re9uires each part% to pro!e his o6n allegations it
6oul# shift to petitioner respon#ent;s bur#en of pro!ing her proposition that
petitioner 6as a6are of the allege# substitution an# 6ith such >no6le#ge
preferre# to continue the polic%" Respon#ent 7ap cites $onzales %a & s. 'e(
)ong %in *ire and Marine Insurance "o., %td"
2
to .ustif% the assu&ption but in
that case unli>e here there 6as >no6le#ge b% the insurer of !iolations of the
contract to 6it@ AIf 6ith the >no6le#ge of the e?istence of other insurances
6hich the #efen#ant #ee&e# !iolations of the contract it has preferre# to continue
the polic% its action a&ounts to a 6ai!er of the annul&ent of the contract """A '
6ai!er &ust be e?press" If it is to be i&plie# fro& con#uct &ainl% sai# con#uct
&ust be clearl% in#icati!e of a clear intent to 6ai!e such right" Especiall% in the
case at bar 6here petitioner is assu&e# to ha!e 6ai!e# a !aluable right nothing
less than a clear positi!e 6ai!er &a#e 6ith full >no6le#ge of the circu&stances
&ust be re9uire#"
1% the plain ter&s of the polic% other insurance 6ithout the consent of petitioner
6oul# ipso facto a!oi# the contract" It re9uire# no affir&ati!e act of election on
the part of the co&pan% to &a>e operati!e the clause a!oi#ing the contract
6here!er the specifie# con#itions shoul# occur" Its obligations cease# unless
being infor&e# of the fact it consente# to the a##itional insurance"
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$he !ali#it% of a clause in a fire insurance polic% to the effect that the
procure&ent of a##itional insurance 6ithout the consent of the insurer
ren#ers ipso facto the polic% !oi# is 6ell-settle#@
In Mil6au>ee Mechani#s; =u&ber Co" !s" ,ibson 1)) 'r>" 53+ 1-3 S" I" +#
5+1 5++ a substantiall% i#entical clause 6as sustaine# an# enforce# the court
sa%ing@ A$he rule in this state an# practicall% all of the states is to the effect that a
clause in a polic% to the effect that the procure&ent of a##itional insurance
6ithout the consent of the insurer ren#ers the polic% !oi# is a !ali# pro!ision" $he
earlier cases of Planters Mutual Insurance Co" !s" ,reen *+ 'r>" -45 54 S"I"
)+ are to the sa&e effect"A 'n# see Vance Insurance +n# E#" *+5" 0Reach !s"
'r>ansas /ar&ers Mut" /ire Ins" Co" J'r>" No!" 13 1)3)K ++3 S" I" +# 35 3)"2
+" Ihere a polic% contains a clause pro!i#ing that the polic% shall be !oi# if
insure# has or shall procure an% other insurance on the propert% the procure&ent
of a##itional insurance 6ithout the consent of the insurer a!oi#s the polic%"A
0Planters; Mut" Ins" 'ss;n !s" ,reen JSupre&e Court of 'r>ansas March 1) 1)43K
54 S"I" 151"2
-" $he polic% pro!i#e# that it shoul# be !oi# in case of other insurance A6ithout
notice an# consent of this co&pan%" """A It also authoriFe# the co&pan% to
ter&inate the contract at an% ti&e at its option b% gi!ing notice an# refun#ing a
ratable proportion of the pre&iu&" +eld that a##itional insurance unless
consente# to or unless a 6ai!er 6as sho6n ipso facto a!oi#e# the contract an#
the fact that the co&pan% ha# not after notice of such insurance cancelle# the
polic% #i# not .ustif% the legal conclusion that it ha# electe# to allo6 it to
continue in force"A 0<ohnson !s" '&erican /ire Ins" Co" JSupre&e Court of
Minnesota 'ug" 1+ 155)K 3- N"I" 5)2
$he aforecite# principles ha!e been applie# in this .uris#iction in $eneral
Insurance & Suret! "orporation s. ,g +ua
3
" $here the polic% issue# b% the
,eneral Insurance 8 Suret% Corporation in fa!or of respon#ent Ng Gua containe#
a pro!ision i#entical 6ith the pro!isions in Polic% No" 3+1) 9uote# abo!e"
4
$his
Court spea>ing thru <ustice Cesar P" 1engson in re!ersing the .u#g&ent of the
Court of 'ppeals an# absol!ing the insurer fro& liabilit% un#er the polic% hel#@
""" 'n# consi#ering the ter&s of the polic% 6hich re9uire# the insure# to #eclare
other insurances the state&ent in 9uestion &ust be #ee&e# to be a state&ent
06arrant%2 bin#ing on both insurer an# insure# that there 6ere no other insurance
on the propert%" """
$he annotation then &ust be #ee&e# to be a 6arrant% that the propert% 6as not
insure# b% an% other polic%" Violation thereof entitle# the insurer to rescin#" 0Sec"
() Insurance 'ct"2 Such &isrepresentation is fatal in the light of our !ie6s in
Santa 'na !s" Co&&ercial Lnion 'ssurance Co&pan% =t#" 55 Phil" -+)" $he
&aterialit% of non-#isclosure of other insurance policies is not open to #oubt"
/urther&ore e!en if the annotations 6ere o!erloo>e# the #efen#ant insurer 6oul#
still be free fro& liabilit% because there is no 9uestion that the polic% issue# b%
,eneral In#e&nit% has not been stated in nor endorsed on Polic% No" 3*1 of
#efen#ant" 'n# as stipulate# in the abo!e-9uote# pro!isions of such polic% Aall
benefit un#er this polic% shall be forfeite#" 0E&phasis supplie#2
$he ob!ious purpose of the aforesai# re9uire&ent in the polic% is to pre!ent o!er-
insurance an# thus a!ert the perpetration of frau#" $he public as 6ell as the
insurer is intereste# in pre!enting the situation in 6hich a fire 6oul# be profitable
to the insure#" 'ccor#ing to <ustice Stor%@ A$he insure# has no right to co&plain
for he assents to co&pl% 6ith all the stipulation on his si#e in or#er to entitle
hi&self to the benefit of the contract 6hich upon reason or principle he has no
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right to as> the court to #ispense 6ith the perfor&ance of his o6n part of the
agree&ent an# %et to bin# the other part% to obligations 6hich but for those
stipulation 6oul# not ha!e been entere# into"A
0
In !ie6 of the abo!e conclusion Ie #ee& it unnecessar% to consi#er the other
#efenses interpose# b% petitioner"
IGERE/ORE the appeale# .u#g&ent of the Court of 'ppeals is re!erse# an# set
asi#e an# the petitioner absol!e# fro& all liabilit% un#er the polic%" Costs against
pri!ate respon#ent"
SO ORDERED"
*ernando -"hair#an., /arredo, Antonio and Aquino, 00., concur.