GR. No. L-71360, 16 July 1986, 143 SCRA 62
Philippine Union Realty Development Corp. (PURDC) insured its building against fire with Development Insurance Corp. (DIC). The policy contained the following provision: “This is an open policy as defined in Section 57 of the Insurance Act. In the event of loss, whether total or partial, it is understood that the amount of the loss shall be subject to the applicable terms, conditions, warranties, and clauses of this Policy, and in no case shall exceed the amount of the policy.” After a fire consumed a part of the building, with PURDC suffering an appraised value of loss of P508,8677 (later adopted by the trial court and the appellate court), PURDC filed its claim with DIC, but the latter refused. DIC argued that since the building was worth more than the sum insured, PURDC must be considered its own insurer for the difference of the amount and the face value of the policy and should share pro rata on the loss sustained.
Whether or not DIC is liable for the appraised value of actual loss sustained by PURDC.
Yes, it is. As defined in the afore stated provision, which is now Section 60 of the Insurance Code, an open policy is one in which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss.” This means that the actual loss, as determined, will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not exceed the face value of the policy. The actual loss having been ascertained in this case, the Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily. There is no such showing. Hence, applying the open policy clause as expressly agreed upon by the parties in their contract, PURDC is entitled to the payment of indemnity under the said contract in the full amount of the appraised value of actual loss.
*Case digest by Sol Christian C. Sayre, LLB-IV, Andres Bonifacioo Law School, SY 2018-2019