3$.

cpublic of toe ibl1ippines

~upreme C!Court
jbtila

THIRD DIVISION
MULTI-WARE MANUFACTURING, G.R. No. 230528
CORPORATION,
Petitioner,
Present:

- versus - LEONEN,J,
Chairperson.
HERNANDO,
CIBELES INSURANCE INTING,
CORPORATION, WESTERN DELOS SANTOS, and
GUARANTY CORPORATION, and LOPEZ, J. Y., JJ
ERNESTY SY, doing business under
the name and style "PAN OCEANIC Promulgated:
February 1, 2021
INSURANCE SERVICES,
Respondents. ~,~',)(..~~

x--- - - - - - - - - · - - - - - - - - - - - - - - - ------------x

DECISION

HERNANDO, J.:

This Petition for Review on Certiorari 1 assails the November 29, 2016
Decision2 and the March 9, 2017 Resolution3 of the Court of Appeals (CA) in
CA-G.R. CV No. 106334, affirming the August 26, 2015 Joint Decision4 of the
Regional Trial Court (RTC) ofManila, Branch 25 in Civil Case Nos. 02-105291
and 02-105317.

The undisputed facts are as follows:

1
Rollo, pp.11-44.
2 Id. at 46-60; penned by Associate Justice Agnes Reyes-Carpio and concurred in by tben Presiding Justice
Andres B. Reyes, Jr. (now a retired member of this Court) and Associate Justice Romeo F. Barza
3 Id. at 80-82; penned by Associate Justice Romero F. Barza and concurred in by Presiding Justice Andres B.
Reyes, Jr. (now a retired member oftbis Court) and Associate Justice Rodi] V. Zalameda (now a member of
tbis Court).
4
Id. at 154-186; penned by Presiding Judge Marlina M. Manuel.
Decision 2 G.R. No. 230528

Petitioner Multi-Ware Manufacturing Corporation (Multi-Ware) is a

domestic corporation engaged in the manufacture of various plastic products. 5
On December 14, 1999, petitioner took out Fire Policy Insurance No. 50-
118320 from respondent Western Guaranty Corporation (Western Guaranty) in
the amount of i"l0,000,000.00. The properties insured were the pieces of
machinery and equipment, tools, spare parts and accessories stored at Buildings
1 and 2, PTA Compound, No. 26 Isidro Francisco Street, Malinta, Valenzuela,
Metro Manila. 6

On February 20, 2000, petitioner secured another fire insurance policy,

this time from respondent Cibeles Insurance Corporation (Cibeles Insurance)
under Fire Insurance Policy No. 80-43032 for i"7,000,000.00, covering the
pieces of machinery and equipment, tools, spare parts and accessories excluding
mould, and stocks of manufactured goods and/or goods still in process, raw
materials and supplies found in the PTA Central Warehouse Compound,
Building 1, No. 26 Isidro Francisco Street, Brgy. Vicente Reales, Dalandan,
Valenzuela, Metro Manila. 7

Subsequently, petitioner obtained from Prudential Guarantee Corp.

(Prudential Guarantee) Fire Insurance Policy Nos. FLMLAY 00000174NA and
FLMLAY 00000284NA 8 covering the same machinery and equipment located
at Building 1, PTA Compound, No. 26 Francisco St., Malinta, Valenzuela,
Metro Manila.

On April 21, 2000, a fire broke out in the PTA Compound causing damage
and loss on the properties of petitioner covered by the fire insurance policies.
Consequently, petitioner filed insurance claims with respondents Cibeles
Insurance and Western Guaranty, but these were denied on the ground ofMulti-
Ware' s violation of Policy Condition Nos. 3, on non-disclosure of co-insurance;
15, on fraudulent claims; and 21, on arson. 9

Its insurance claims for payment having been denied by Cibeles Insurance
and Western Guaranty, petitioner filed separate civil actions against these
insurance companies before the RTC of Manila. These cases were eventually
consolidated for trial. 10

Ruling of the Regional Trial Court:

On August 26, 2015, the RTC rendered its Joint Decision, the dispositive
portion of which reads:
WHEREFORE, in the light of the foregoing, considering that plaintiff
violated Policy Condition No. 3 of Fire Insurance Policy No. 50-118230 issued

Id. at 12.
6
Id. at 47.
7
Id.
8
See id. at 206.
9
Id.at47.
10 Id.
Decision 3 G.R. No. 230528

by defendant Western Guaranty and Fire Insurance Policy No. 80-43032 issued
by defendant Cibeles, all the benefits due to plaintiff under the policies are
deemed forfeited.

These two complaints are therefore, ordered DISMISS[ED] for lack of

merit.

Likewise, the counter-claims of the defendants are dismissed. No cost.

SO ORDERED.11 (Emphasis supplied)

Multi-Ware filed a motion for reconsideration but it was denied by the

RTC in an Order12 dated January 8, 2016.

Ruling of the Court of Appeals:

On appeal, the CA sustained the RTC judgment, viz.:

WHEREFORE, premises considered, the appeal of Multi-Wave
Manufacturing Corporation is hereby DENIED for lack of merit. Accordingly,
the Joint Decision dated 26 August 2015 and Order dated 8 January 2016 of the
RTC in Civil Cases Nos. 02-105291 & 02-105317 are AFFIRMED.

SO ORDERED. 13

Petitioner's motion for reconsideration was denied by the CA m a

Resolution dated March 9, 2017. Hence, this petition before Us.

Issues:

This petition which is hinged on the following grounds:

I. THE HONORABLE [CA] SERIOUSLY ERRED IN HOLDING THAT

PETITIONER VIOLATED POLICY CONDITION NO. 3, DESPITE
UTTER LACK OF COMPETENT EVIDENCE TO SUPPORT
RESPONDENTS' STANCE;

II. THE HONORABLE [CA] SERIOUSLY ERRED IN HOLDING THAT

POLICY CONDITION NO. 3 APPLIES TO MACHINERIES,
EQUIPMENT AND TOOLS. 14

Stated otherwise, the issue is whether petitioner violated Policy Condition

No. 3 or the "other insurance clause" uniformly contained in the subject
insurance contracts resulting to avoidance of the said policies.

Our Ruling

We deny the Petition for lack merit.

Policy Condition No. 3 reads:

11
Id. at I 86.
12
See id. at 49.
13
Id. at 60.
14
Id. at 26.
Decision 4 G.R. No. 230528

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 such notice be given and the
particulars of such insurance or insurances be stated therein or endorsed on 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 deemed forfeited, provided however, that this Condition shall not
apply when the total insurance or insurances in force at the time ofloss or damage
is not more than P200,000.00. 15

Petitioner insists that there was no violation of Policy Condition No. 3

when it did not disclose to Cibeles Insurance and Western Guaranty the
existence of the other insurance policies that it procured covering its machinery
and equipment since said condition only prohibits non-disclosure of co-
insurance on stocks in trade, goods in process and inventories.

We do not agree.

Policy Condition No. 3 is clear that it obligates petitioner, as insured, to

notify the insurer of any insurance effected to cover the insured items which
involve any of its property or stocks in trade, goods in process and/or
inventories and that non-disclosure by the insured of other insurance policies
obtained covering these items would result in the forfeiture of all the benefits
under the policy. To be regarded as a violation of Policy Condition No. 3, the
other existing but undisclosed policies must be upon the same matter and with
the same interest and risk.

The records of this case show that petlt10ner obtained fire insurance
policies from Cibeles Insurance simultaneously with Western Guaranty and
Prudential Guarantee covering the same matter and the same risk, i.e., the
policies uniformly cover fire losses of petitioner's machinery and equipment.
Although Policy Condition No. 3 does not specifically state "machinery and
equipment" as among the subject of disclosure, it is apparent that the disclosure
extends to pieces of machinery and equipment as well since Policy Condition
No. 3 speaks of disclosure of other insurance obtained covering "any of the
property".

The word "property" is a generic term. Hence, it could include machinery

and equipment which are assets susceptible of being insured. Inasmuch as
machinery and equipment are included under the term "property", petitioner
must give notice to the insurer of any other fire insurance policies on said
machinery and equipment. As established during trial, petitioner did not notify
Cibeles Insurance and Western Guaranty that it had procured other fire
insurance policies covering its property consisting of the same machinery and
equipment. Consequently, the insurers could validly deny the insurance claim
of petitioner for violation of Policy Condition No. 3.

15 Id. at 50.
Decision 5 G.R. No. 230528

In American Home Assurance Company v. Chua, 16 the Court held that

where the insurance policy specifies as a condition the disclosure of existing co-
insurers, non-disclosure thereof is a violation that entitles the insurer to avoid
the policy. This condition is common in fire insurance policies and is known as
the "other insurance clause".

In Geagonia v. Court ofAppeals, 17 the Court explained that the rationale

behind the incorporation of"other insurance" clause in fire policies is to prevent
over-insurance 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.

Petitioner contends that the insurers in this case failed to prove by

preponderance of evidence that the insurance policies it procured from them
covered the same subject matter. It insists that the findings of the courts below
that the properties insured under the policies obtained by petitioner from the
three insurance firms were one and the same since they were all located in the
same place, is unsubstantiated by the evidence and grounded entirely on
surmises or conjectures. This is not so.

In ruling that the properties subject of the insurance policies obtained by

petitioner from different insurers were identical, the RTC correctly held that:
[A] nent to the Fire Insurance Policy Nos. FLMLAY 00000175NA (Exhibit '4'
to '4-G') and FLMLAY 00000283NA (Exhibit '5' to '5-G') procured by plaintiff
from Prudential Guarantee on its machineries and equipment located at Building
I, defendant W estem Guaranty and defendant Cibeles alleged that plaintiff failed
to disclose or notify them of these fire insurance policies taken from Prudential
Guarantee.

An examination of these two fire insurance policies issued by Prudential

Guarantee to the plaintiff, reveals that the property subject of insurance are
machineries and equipment located at Building !, PTA Compound, No. 26,
Francisco St. Malinta, Valenzuela, Metro Manila. Likewise, the properties
subject of insurance in the fire insurance policies issued by Western Guaranty are
machineries and equipment located at Warehouse 1 & 2 within PTA Compound
No. 26 Isidro Francisco Street, Malinta, Valenzuela, M.M. and machineries and
equipment insured by defendant Cibeles were contained in Building 1, within
Phil. Tobacco Adm. Central Warehouse Cpd. along No. 26 Isidro Francisco St.
Brgy. Vicente Reales, Dalandanan, Valenzuela, M.M.

Based on the foregoing, the court finds that the properties such as the
machineries and equipment subject of these four insurance policies are one and
the same properties considering that the location of these machineries and
equipment are all contained in Building 1 within the PTA Compound. The

16
368 Phil. 555 (1999).
17
311 Phil. 152 (I 995).
Decision 6 G.R. No. 230528

allegation therefore of the plaintiff that the properties mentioned in all the
insurance policies are not the same properties holds no water. Thus, for failure of
the plaintiff to disclose to defendants Western Guaranty and Cibeles of the fire
insurance policies it procured over its machineries and equipment from
Prudential Guarantee and vice-versa, the plaintiff has violated Policy Condition
No. 3 of its insurance policies." 18

Well-entrenched in jurisprudence is the rule that factual findings of the

trial court, especially when affirmed by the appellate court, are accorded the
highest degree of respect and considered conclusive between the parties, save
for certain exceptional and meritorious circumstances, such as: (1) when the
findings of a trial court are grounded entirely on speculation, surmises or
conjectures; (2) when a lower court's inference from its factual findings is
manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion in the appreciation of facts; (4) when the findings of the appellate
court go beyond the issues of the case, or fail to notice certain relevant facts
which, if properly considered, will justify a different conclusion; ( 5) when there
is a misappreciation of facts; (6) when the findings of fact are conclusions
without mention of the specific evidence on which they are based, are premised
on the absence of evidence, or are contradicted by evidence on record. 19 Not
one of these exceptional circumstances is present in this case.

As discussed earlier, it is apparent that Policy Condition No. 3, or the

"other insurance clause", was violated since petitioner failed to notify the
insurers of the fire insurance policies it procured from the different insurers
covering the same subject and interest. Petitioner utterly failed to disprove the
RTC's reasonable conclusion that the machinery and equipment covered by all
the fire insurance policies were identical considering that all these properties
were located in the same building inside the PTA Compound. It is significant
to note that aside from its bare allegations, petitioner did not adduce adequate
proof to show that the buildings and/or warehouses referred to in each of the
policies pertain to distinct and separate structures inside the PTA Compound.

Since the policy procured by petitioner from Cibeles Insurance covered

the same subject and interest as that covered by the policies issued by Western
Guaranty and Prudential Guarantee, the existence of other insurance policies
referred to under Policy Condition No. 3 is undeniable. The non-disclosure of
these policies to the insurers was fatal to petitioner's right to recover on the
insurance policies.

WHEREFORE, the petitions are DENIED for lack of merit. The

November 29, 2016 Decision and March 9, 2017 Resolution of the Court of
Appeals in CA-G.R. CV No. 106334 are hereby AFFIRMED. Costs on the
petitioner.

18
Rollo, p. 179.
19 Philippine Health-Care Providers, Inc. (MAX/CARE) v. Estrada, 566 Phil. 603, 609-610 (2008), citing Ilao-
Quianay v. Mapile, 510 Phil. 736 (2005).
Decision 7 G.R. No. 230528

SO ORDERED.

~~.
RA.l\ION,,P UL . HERNANDO
"-.,.../Associate Justice

WE CONCUR:

CM. V. F. LEONEN
Associate Justice
Chairperson

HENRI EDGL.DELOSSANI'OS
Associate Justice

JHOSE~OPEZ
Associate Justice
Decision 8 G.R. No. 230528

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

Chie Justice