Karl D Minglana Law-309 Insurance
Gonzalez La O vs. Yek Tong Lin Fire & Marine Ins. Co.
(55 Phil. 386)
Facts: Plaintiff Emilio Gonzales La O (Plaintiff) insured his goods
consisting of leaf tobacco which was stored in a warehouse
located in Soler street, Manila with four different assurance
companies one of which is the defendant THE YEK TONG LIN FIRE
& MARINE INSURANCE CO., LTD (defendant).
On January 11, 1928, a fire broke out which destroyed the
warehouse and with it the insured leaf tobacco. Thus, plaintiff
filed an action to recover the amount equivalent to the policies
issued by the four assurance companies and the cases where
plaintiff demanded 190,000.00 from the other 3 assurance
companies and 100,000.00 from defendant.
After the presentation of evidence by the plaintiff, the other 3
defendant assurance companies offered a compromise by paying
85% of the value of plaintiff’s claim on ground that plaintiff
violated warranties A and G of the policies issued providing that
the building to be used to store the leaf tobacco would not be
occupied by any other lessee, nor would be used for the deposit
of other goods, without the consent of said defendants, and
inasmuch as the 3 assurance companies alleged in their answer
that the owner of the burnt warehouse had leased the same to
several persons for the storage of sundry articles, the plaintiff
had to accept the proposed compromise, and in consequence
thereof, the three cases were dismissed.
Defendant offered the same terms of compromise but was not
accepted by the plaintiff on the ground that said defendant could
not raise the violation of warranties A and G for the simple reason
that it was the defendant itself, as owner, who had leased the
building which later was destroyed by fire, to another person
after having already ceded a portion of it to the plaintiff.
The trial court ruled in favor of the plaintiff ordering the
defendant to pay the 100,000.00 proceeds of the policy. Thus,
the defendant appealed alleging inter-alia that that the trial court
erred in not declaring that inasmuch as the plaintiff failed to
notify the defendant corporation in writing, of other
insurance policies obtained by him, he has violated article
3 of the conditions of the policy in question, thereby
rendering the policy null and void.
Issue: Whether or not the defendant can deny the recovery on
the ground of violation of article 3 of the policy issued by the
defendant.
Ruling: No, the appellant cannot invoke the violation of article 3
of the conditions of the insurance policy as the appellee correctly
contend that Guillermo Cu Unjieng, who was then president and
majority shareholder of the defendant appellant company, the
Yek Tong Lin Fire & Marine Insurance Co., knew that there were
other insurances, at least from the attempt to raise the insurance
premium on the warehouse and the appellee’s tobacco deposited
therein to 1 per centum, and it was later reduced upon petition of
the appellant itself and other assurance companies to 0.75 per
centum presented to the association of assurance companies in
the year 1927, and notwithstanding this, said defendant appellant
did not rescind the insurance policies in question, but demanded
and collected from the appellee the increased premium.
That the defendant appellant had knowledge of the existence of
other policies obtained by the plaintiff from other insurance
companies, is specifically shown by the defendant’s answer
wherein it alleges, by way of special defense, the fact that there
exist other policies issued by the companies mentioned therein.
If, with the knowledge of the existence of other insurances which
the defendant deemed violations of the contract, it has preferred
to continue the policy, its action amounts to a waiver of the
annulment of the contract, in accordance with the following
doctrine in 19 Cyc., 791, 792:
"FAILURE TO ASSERT FORFEITURE — IN GENERAL. — While the
weight of authority is that a policy conditioned to become void
upon a breach of a warranty is void ipso facto upon such a breach
without formal proceedings on the part of the insurer, yet it is
true that such conditions are inserted for the benefit of the
insurer and may be waived, and that the insurer may elect to
continue the policy despite the breach. If it does the policy is
revived and restored. Its failure to assert a forfeiture therefore is
at least evidence tending to show a waiver thereof. Many
authorities go further, however, and hold that the failure to assert
a forfeiture after knowledge of a ground thereof will amount of
itself to a waiver.
