Amando Geagonia filed a claim under his P100,000 fire insurance policy with Country Bankers after a fire destroyed his store's stock. Country Bankers denied the claim, stating Geagonia violated the policy's condition requiring disclosure of any other insurance policies by not informing them of his P100,000 policy with Philippine First Insurance Co. The Court of Appeals sided with Country Bankers, finding a letter from Geagonia proved he knew of the other policy. The Supreme Court agreed, determining Geagonia knew of the prior policy based on the letter, and thus violated the condition of his Country Bankers policy.
Amando Geagonia filed a claim under his P100,000 fire insurance policy with Country Bankers after a fire destroyed his store's stock. Country Bankers denied the claim, stating Geagonia violated the policy's condition requiring disclosure of any other insurance policies by not informing them of his P100,000 policy with Philippine First Insurance Co. The Court of Appeals sided with Country Bankers, finding a letter from Geagonia proved he knew of the other policy. The Supreme Court agreed, determining Geagonia knew of the prior policy based on the letter, and thus violated the condition of his Country Bankers policy.
Amando Geagonia filed a claim under his P100,000 fire insurance policy with Country Bankers after a fire destroyed his store's stock. Country Bankers denied the claim, stating Geagonia violated the policy's condition requiring disclosure of any other insurance policies by not informing them of his P100,000 policy with Philippine First Insurance Co. The Court of Appeals sided with Country Bankers, finding a letter from Geagonia proved he knew of the other policy. The Supreme Court agreed, determining Geagonia knew of the prior policy based on the letter, and thus violated the condition of his Country Bankers policy.
Amando Geagonia filed a claim under his P100,000 fire insurance policy with Country Bankers after a fire destroyed his store's stock. Country Bankers denied the claim, stating Geagonia violated the policy's condition requiring disclosure of any other insurance policies by not informing them of his P100,000 policy with Philippine First Insurance Co. The Court of Appeals sided with Country Bankers, finding a letter from Geagonia proved he knew of the other policy. The Supreme Court agreed, determining Geagonia knew of the prior policy based on the letter, and thus violated the condition of his Country Bankers policy.
Amando Geagonia is the owner of Norman’s Mart located in the public market of San Francisco, Agusan del Sur. He obtained from Country Bankers Insurance a re insurance policy for P 100,000.00 . The period of the policy was from December 22 1989 to December 22 1990, the insurance covered stock-in-trade consis ng of dry goods and RTW’s for men and women wear. The policy contained a condi on:
“that the insured must give no ce to the company of any insurance or insurances already a ected or may subsequently a ected and unless such no ce is given before of the occurrence of any loss or damage, all bene ts under the policy shall be forfeited provided however, that this condi on shall not apply when the total insurance or insurances in force at the me of the loss or damage is not more than P200,000.00.”
On May 27, 1990 a re broke out at the public market and completely destroyed the stocks of Amando promp ng him to le with Country Bankers a claim under the policy. Country Bankers denies the claim that the stock-in-trade was also insured by Philippine First Insurance Co. for 100,000 and is therefore in viola on of Condi on 3 of the policy.
Amando led a complaint with the Insurance Commission against Country Bankers for the recovery of 100,000 under the re insurance policy. The Insurance Commission found that the pe oner did not violate Condi on 3 as he had no knowledge of the existence of the two re insurance policies obtained from the PFIC; that it was Cebu Tesing Tex les which procured the PFIC policies without informing him or securing his consent; and that Cebu Tesing Tex le, as his creditor, had insurable interest on the stocks.
Country Bankers appealed to the Court of Appeals which reversed the decision of the Insurance Commission on the ground that pe oner knew of the knew of the existence of the two other policies issued by the PFIC.
Issue:
WON the pe oner had prior knowledge of the two insurance policies issued by the PFIC when he obtained the re insurance policy from the private respondent, thereby, for not disclosing such fact, viola ng Condi on 3 of the policy.
Ruling:
The Supreme Court agreed with the Court of Appeals that the pe oner knew of the prior
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policies issued by the PFIC. His le er of 18 January 1991 to the private respondent conclusively proves this knowledge. His tes mony to the contrary before the Insurance Commissioner and which the la er relied upon cannot prevail over a wri en admission made ante litem motam. It was, indeed, incredible that he did not know about the prior policies since these policies were not new or original.
Condi on 3 of the private respondent's Policy No. F-14622 is a condi on which is not proscribed by law. Its incorpora on in the policy is allowed by Sec on 75 of the Insurance Code 15 which provides that "[a] policy may declare that a viola on of speci ed provisions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy.” Such a condi on is a provision which invariably appears in re insurance policies and is intended to prevent an increase in the moral hazard. It is commonly known as the addi onal or "other insurance" clause and has been upheld as valid and as a warranty that no other insurance exists. Its viola on would thus avoid the policy. 16 However, in order to cons tute a viola on, the other insurance must be upon same subject ma er, the same interest therein, and the same risk.
A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and interest. The insurable interests of a mortgagor and a mortgagee on the mortgaged property are dis nct and separate. Since the two policies of the PFIC do not cover the same interest as that covered by the policy of the private respondent, no double insurance exists. The non-disclosure then of the former policies was not fatal to the pe oner's right to recover on the private respondent's policy.
By sta ng within Condi on 3 itself that such condi on shall not apply if the total insurance in force at the me of loss does not exceed P200,000.00, the private respondent was amenable to assume a coinsurer's liability up to a loss not exceeding P200,000.00. What it had in mind was to discourage over-insurance. Indeed, the ra onale behind the incorpora on of "other insurance" clause in re policies is to prevent overinsurance and thus avert the perpetra on of fraud. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value, the insured may have an inducement to destroy the property for the purpose of collec ng the insurance.
WHEREFORE, the instant pe on is hereby GRANTED. The decision of the Court of Appeals is SET ASIDE and the decision of the Insurance Commission is REINSTATED. ti ti ti ti ti ti ti ti ti fi ti ti ti ti tt ti
