G.R. No. L-27932, 30 October 1972, 47 SCRA 271

FACTS:

On January 12, 1962, Union Manufacturing Co., Inc. (UMC) obtain certain loans from Republic Bank in the total sum of 415,000.00. To secure the payment thereof, UMC executed real and chattel mortgage on certain properties. The Republic Bank procured from the defendant Philippine Guaranty Co., Inc. an insurance coverage on loss against fire for 500,000.00over the properties of UMC, as described in defendant’s cover note dated September 25, 1962, with the annotation that loss or damage, if any, under said cover note is payable to Republic Bank as its interest may appear, subject however to the printed conditions of said defendant’s Fire Insurance Policy form.

On September 6, 1964, a fire occurred in the premises of UMC and onOctober 6, 1964, UMC filed its fire claim with the PGC Inc., thru itsadjuster, H.H. Bayne Adjustment Co.,
which was denied by saiddefendant in its letter dated November 26, 1964 on the following ground: “Policy Condition No. 3 and/or the ‘Other Insurance Clause’ of the policy was violated because you did not give notice to us of the other insurance which you had taken from New India for 80,000.00, SincereInsurancefor 25,000.00 and Manila Insurance for 200,000.00 with the result that these insurances of which we became aware of only after the fire, were not endorsed on our policy.

ISSUE:

Whether or not Republic Bank can recover.

RULING:

No. Republic Bank cannot recover.

Without deciding- whether notice of other insurance upon the sameproperty must be given in writing, or whether a verbal notice is sufficientto render an insurance valid which requires such notice, whether oral or written, we hold that in the absolute absence of such notice when it isone of the conditions specified in the fire insurance policy, the policy isnull and void. (Santa Ana vs. Commercial Union Ass. Co., 55 Phil. 128).

If the insured has violated or failed to perform the conditions of thecontract, and such a violation or want of performance has not beenwaived by the insurer, then the insured cannot recover. Courts are notpermitted to make contracts for the parties. The functions and duty of thecourts consist simply in enforcing and carrying out the contracts actuallymade.While it is true, as a general rule, that contracts of insurance areconstrued most favorably to the insured, yet contracts of insurance, likeother contracts, are to be construed according to the sense and meaningof the terms which the parties themselves have used. If such terms areclear and unambiguous they must be taken and understood in their plain,ordinary and popular sense.The annotation then, must be deemed to be a warranty that the propertywas not insured by any other policy. Violation thereof entitles the insurer to rescind. The materiality of non-disclosure of other insurance policies isnot open to doubt.The insurance contract may be rather onerous, 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.

*Case digest by Karishina Viado, LLB-IV, Andres Bonifacio College Law School, SY 2018-2019