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Geagonia Vs CA
Geagonia Vs CA
Facts:
1.
Geagonia, owner of a store, obtained from Country Bankers fire
insurance policy for P100,000.00, for 1 year policy and covered the stock
trading of dry goods.
a. The policy noted the requirement that:
"3. The insured shall give notice to the Company of any insurance or
insurances already effected, or which may subsequently be effected, covering
any of the property or properties consisting of stocks in trade, goods
in process and/or inventories only hereby insured, and unless notice be given
and the particulars of such insurance or insurances be stated therein or
endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on
behalf of the Company before the occurrence of any loss or damage, all
benefits under this policy shall be deemedforfeited, provided however, that
this condition shall not apply when the total insurance or insurances in force at
the time of the loss or damage is not more than P200,000.00."
2. The petitioners stocks were destroyed by fire.
a. He then filed a claim which was subsequently denied because the
petitioners stocks were covered by two other fire insurance policies for Php
200,000 issued by PFIC.
3. The basis of the private respondent's denial was the petitioner's alleged
violation of Condition 3 of the policy.
4. Geagonia then filed a complaint against the private respondent in the
Insurance Commission for the recovery of P100,000.00 under fire
insurance policy and damages.
a. He claimed that he knew the existence of the other two policies.
b. But, he said that he had no knowledge of the provision in the private
respondent's policy requiring him to inform it of the prior policies and this
requirement was not mentioned to him by the private respondent's agent.
5. The Insurance Commission found that the petitioner did not violate
Condition 3 as he had no knowledge of the existence of the two fire
insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles
w/c procured the PFIC policies w/o informing him or securing his consent; and
that Cebu Tesing Textile, as his creditor, had insurable interest on the stocks.
a. The Insurance Commission then ordered the respondent company to pay
complainant the sum of P100,000.00 with interest and attorneys fees.
6. CA reversed the decision of the Insurance Commission because it found
that the petitioner knew of the existence of the two other policies issued by the
PFIC.
Issues:
1. Whether the petitioner had not disclosed the two insurance policies when
he obtained the fire insurance and thereby violated Condition 3 of the policy.
YES!
2. Whether he is prohibited from recovering. NO!
Held:
1.
The court agreed with the CA that the petitioner knew of the prior
policies issued by the PFIC. His letter of 18 January 1991 to the private
respondent conclusively proves this knowledge. His testimony to the contrary
before the Insurance Commissioner and which the latter relied upon cannot
prevail over a written 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.
2.
Stated differently, provisions, conditions or exceptions in policies
which tend to work a forfeiture of insurance policies should be
construed most strictly against those for whose benefits they are
inserted, and most favorably toward those against whom they are
intended to operate.
With these principles in mind, Condition 3 of the subject policy is not
totally free from ambiguity and must be meticulously analyzed. Such analysis
leads us to conclude that (a) the prohibition applies only to double insurance,
and (b) the nullity of the policy shall only be to the extent exceeding
P200,000.00 of the total policies obtained.
Furthermore, by stating within Condition 3 itself that such condition
shall not apply if the total insurance in force at the time of loss does not
exceed P200,000.00, the private respondent wasamenable 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 rationale behind the
incorporation of "other insurance" clause in fire policies is to prevent overinsurance and thus avert the perpetration 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 collecting the insurance. The public as
well as the insurer is interested in preventing a situation in which a fire would
be profitable to the insured.
WHEREFORE, the instant petition is hereby GRANTED. The decision of the
Court of Appeals in CA-G.R. SP No. 31916 is SET ASIDE and the decision of
the Insurance Commission in Case No. 3340 is REINSTATED. Costs against
private respondent Country Bankers Insurance Corporation. SO ORDERED.