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    Union Manufacturing Co Vs Philippine Guaranty Co

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    Chelle Belenzo
    The Supreme Court affirmed the trial court's decision that Republic Bank and Union Manufacturing Co cannot recover from Philippine Guaranty's fire insurance policy. When taking out the policy, UMCI failed to disclose it had other existing fire insurance policies, in violation of the terms of the policy. The policy also prohibited obtaining additional insurance on the properties without notifying Philippine Guaranty, which UMCI also violated. Prior cases have established that failing to comply with express policy terms, like disclosure of other insurance, renders the policy null and void.

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    Union Manufacturing Co Vs Philippine Guaranty Co

    Uploaded by

    Chelle Belenzo
    79 views3 pages
    The Supreme Court affirmed the trial court's decision that Republic Bank and Union Manufacturing Co cannot recover from Philippine Guaranty's fire insurance policy. When taking out the policy, UMCI failed to disclose it had other existing fire insurance policies, in violation of the terms of the policy. The policy also prohibited obtaining additional insurance on the properties without notifying Philippine Guaranty, which UMCI also violated. Prior cases have established that failing to comply with express policy terms, like disclosure of other insurance, renders the policy null and void.

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    Union Manufacturing Co vs Philippine Guaranty Co

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    The Supreme Court affirmed the trial court's decision that Republic Bank and Union Manufacturing Co cannot recover from Philippine Guaranty's fire insurance policy. When taking out the policy, UMCI failed to disclose it had other existing fire insurance policies, in violation of the terms of the policy. The policy also prohibited obtaining additional insurance on the properties without notifying Philippine Guaranty, which UMCI also violated. Prior cases have established that failing to comply with express policy terms, like disclosure of other insurance, renders the policy null and void.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    79 views3 pages

    Union Manufacturing Co Vs Philippine Guaranty Co

    Uploaded by

    Chelle Belenzo
    The Supreme Court affirmed the trial court's decision that Republic Bank and Union Manufacturing Co cannot recover from Philippine Guaranty's fire insurance policy. When taking out the policy, UMCI failed to disclose it had other existing fire insurance policies, in violation of the terms of the policy. The policy also prohibited obtaining additional insurance on the properties without notifying Philippine Guaranty, which UMCI also violated. Prior cases have established that failing to comply with express policy terms, like disclosure of other insurance, renders the policy null and void.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Union Manufacturing Co., Inc vs Philippine Guaranty Co.

    G.R. No. L-27932


    October 30, 1972
    Ponente: J. Fernando
    Belenzo-Group 4

    Plaintiffs: UNION MANUFACTURING CO., INC. and the REPUBLIC BANK, plaintiffs,
    Plaintiff-apellant: REPUBLIC BANK
    Defendant-appellee: PHILIPPINE GUARANTY CO., INC.,

    Facts:
     January 12, 1962, the Union Manufacturing Co., Inc. obtained certain loans, overdrafts
    and other credit accommodations from the Republic Bank in the total sum of
    P415,000.00 with interest at 9% per annum from said date
    o to secure  UMCI executed a real and chattel mortgages on certain properties,
    which are more particularly described and listed at the back of the mortgage
    contract
     That as additional condition of the mortgage contract, the Union Manufacturing Co., Inc.
    undertook to secure insurance coverage over the mortgaged properties for the same
    amount of P415,000.00 distributed as follows: (a) Buildings, P30,000.00; (b) Machineries,
    P300,000.00; and (c) Merchandise Inventory, P85,000.00, giving a total of P415,000.00;
     UMCI failed to secure insurance coverage on the mortgaged properties since January 12,
    1962, despite the fact that Cua Tok, its general manager, was reminded of said
    requirement
     Republic Bank procured from the defendant, Philippine Guaranty Co., Inc. an insurance
    coverage on loss against fire for P500,000.00 over the properties of the Union
    Manufacturing Co., Inc
     September 27, 1962  Fire Insurance Policy No. 43170 ... was issued for the sum of
    P500,000.00 in favor of the assured, Union Manufacturing Co., Inc., for which the
    corresponding premium in the sum of P8,328.12, which was reduced to P6,688.12, was
    paid by the Republic Bank to the defendant, Philippine Guaranty Co., Inc. ...;
     Upon the expiration of said fire policy on September 25, 1963, the same was renewed by
    the Republic Bank upon payment of the corresponding premium in the same amount of
    P6,663.52 on September 26, 1963;
     In the corresponding voucher, it appears that although said renewal premium was paid
    by the Republic Bank, such payment was for the account of Union Manufacturing Co., Inc.
    and that the cash voucher for the payment of the first premium was paid also by the
    Republic Bank but for the account Union Manufacturing Co., Inc.;
     Sometime on September 6, 1964, a fire occurred in the premises of the Union
    Manufacturing Co., Inc.;
     October 6, 1964, the Union Manufacturing Co., Inc. filed its fire claim with the defendant
    Philippine Guaranty Co., Inc., thru its adjuster, H. H. Bayne Adjustment Co., which was
    denied by said defendant in its letter dated November 27, 1964
    o GROUNDS FOR DENIAL
     “a. Policy Condition No. 3 and/or the 'Other Insurance Clause' of the policy
    violated because you did not give notice to us the other insurance which
    you had taken from New India for P80,000.00, Sincere Insurance for
    P25,000.00 and Manila Insurance for P200,000.00 with the result that
    these insurances, of which we became aware of only after the fire, were
    not endorsed on our policy; and
     “Policy Condition No. 11 was not complied with because you have failed to
    give to our representatives the required documents and other proofs with
    respect to your claim and matters touching on our liability, if any, and the
    amount of such liability”
     As of September, 1962, when the defendant Philippine Guaranty Co., issued Fire
    Insurance Policy No. 43170 in the sum of P500,000.00 to cover the properties of the
    Union Manufacturing Co., Inc., the same properties were already covered by Fire Policy
    No. 1533 of the Sincere Insurance Company for P25,000.00 for the period from October
    7, 1961 to October 7, 1962 and by insurance policies Nos. F-2314 and F-2590 of the
    Oceanic Insurance Agency for the total sum of P300,000.00 and for periods respectively,
    from January 27, 1962 to January 27, 1963, and from June 1, 1962 to June 1, 1963
     That when said defendant's Fire Insurance Policy No. 43170 was already in full force and
    effect, the Union Manufacturing Co., Inc. without the consent of the defendant,
    Philippine Guaranty Co., Inc., obtained other insurance policies totalling P305,000.00
    over the same properties prior to the fire
     RTC – rendered decision in favor of Philippine Guaranty Co., Inc.
    o UMCI  has violated the condition of the policy to the effect that it did not reveal
    the existence of other insurance policies over the same properties and it
    appeared that while the policy of the defendant was in full force and effect the
    Union Manufacturing Co., Inc. secured other fire insurance policies without the
    written consent of the defendant endorsed on the policy, the conclusion is
    inevitable that both the Republic Bank and Union Manufacturing Co., Inc. cannot
    recover from the same policy of the defendant because the same is null and void.
    ISSUE: Whether or not Republic Bank and Union Manufacturing Co. Inc can recover from the
    insurance policy issued by Philippine Guaranty Co., Inc.? NO

    RULING:
     Santa Ana v. Commercial Union Assurance Co.: "Without deciding whether notice of
    other insurance upon the same property must be given in writing, or whether a verbal
    notice is sufficient to render an insurance valid which requires such notice, whether oral
    or written, we hold 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.(Justice Villa-
    Real)”
     Ang Giok Chip v. Springfield Fire & Marine Ins. Co.,: "It is admitted that the policy before
    us was accepted by the plaintiff. The receipt of this policy by the insured without
    objection binds both the acceptor and the insured to the terms thereof. The insured may
    not thereafter be heard to say that he did not read the policy or know its terms, since it is
    his duty to read his policy and it will be assumed that he did so.(Justice Malcolm)"
     Young v. Midland Textile Insurance Company: "If the insured has violated or failed to
    perform the conditions of the contract, and such a violation or want of performance has
    not been waived by the insurer, then the insured cannot recover. Courts are not
    permitted to make contracts for the parties. The function and duty of the courts consist
    simply in enforcing and carrying out the contracts actually made. While it is true, as a
    general rule, that contracts of insurance are construed most favorably to the insured, yet
    contracts of insurance, like other contracts, are to be construed according to the sense
    and meaning of the terms which the parties themselves have used. If such terms are
    clear and unambiguous they must be taken and understood in their plain, ordinary and
    popular sense.(Justice Johnson)"
     General Insurance & Surety Corp. v. Ng Hua: "The annotation then, must be deemed to
    be a warranty that the property was not insured by any other policy. Violation thereof
    entitles the insurer to rescind (Justice Bengzon).”
     Misamis Lumber Corp. v. Capital Ins. & Surety Co., Inc.,: "The insurance contract may be
    rather onerous ('one sided', as the lower court put it), but that in itself does not justify
    the abrogation of its express terms, terms which the insured accepted or adhered to and
    which is the law between the contracting parties.(Justice J.B.L Reyes)"
     There is no escaping the conclusion then that the lower court could not have disposed of
    this case in a way other than it did.
     Had it acted otherwise, it clearly would have disregarded pronouncements of this Court,
    the compelling force of which cannot be denied.
    JUDGMENT: WHEREFORE, the decision of the lower court of March 31, 1967 is affirmed. No
    costs.

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