Incontestability Clause conducted an investigation into the claim, 8 and

SECOND DIVISION came out with the following findings: AHSEaD

[G.R. No. 175666. July 29, 2013.] 1. Sotero did not personally apply for insurance
coverage, as she was illiterate;
MANILA BANKERS LIFE INSURANCE
CORPORATION,  petitioner, vs. CRESENCIA 2. Sotero was sickly since 1990;
P.  ABAN,  respondent.
3. Sotero did not have the financial capability to pay
DECISION the insurance premiums on Insurance Policy No.
747411;
DEL CASTILLO,  J  p:
4. Sotero did not sign the July 3, 1993 application
The ultimate aim of Section 48 of the Insurance
for insurance; 9 [and]
Code is to compel insurers to solicit business from
or provide insurance coverage only to legitimate 5. Respondent was the one who filed the insurance
and bona fide  clients, by requiring them to application, and . . . designated herself as the
thoroughly investigate those they insure within two beneficiary. 10
years from effectivity of the policy and while the
For the above reasons, petitioner denied
insured is still alive. If they do not, they will be
respondent's claim on April 16, 1997 and refunded
obligated to honor claims on the policies they issue,
the premiums paid on the policy. 11
regardless of fraud, concealment or
misrepresentation. The law assumes that they will On April 24, 1997, petitioner filed a civil case for
do just that and not sit on their laurels, rescission and/or annulment of the policy, which
indiscriminately soliciting and accepting insurance was docketed as Civil Case No. 97-867 and
business from any Tom, Dick and Harry. assigned to Branch 134 of the Makati Regional Trial
Court. The main thesis of the Complaint was that
Assailed in this Petition for Review
the policy was obtained by fraud, concealment
on Certiorari  1 are the September 28, 2005
and/or misrepresentation under the Insurance
Decision 2 of the Court of Appeals (CA) in CA-G.R.
Code, 12 which thus renders it voidable under
CV No. 62286 and its November 9, 2006
Article 1390 13 of the Civil Code.
Resolution 3 denying the petitioner's Motion for
Reconsideration. 4 Respondent filed a Motion to Dismiss 14 claiming
that petitioner's cause of action was barred by
Factual Antecedents
prescription pursuant to Section 48 of
On July 3, 1993, Delia Sotero (Sotero) took out a life the Insurance Code, which provides as follows:
insurance policy from  Bankers Life, designating
Whenever a right to rescind a contract of insurance
respondent Cresencia P. Aban (Aban), her niece, as
is given to the insurer by any provision of this
her beneficiary.
chapter, such right must be exercised previous to
Petitioner issued Insurance Policy No. 747411 (the the commencement of an action on the contract.
policy), with a face value of P100,000.00, in
Sotero's favor on August 30, 1993, after the
requisite medical examination and payment of the
insurance premium. 6

On April 10, 1996, 7 when the insurance policy had

been in force for more than two years and seven
months, Sotero died. Respondent filed a claim for
the insurance proceeds on July 9, 1996. Petitioner
After a policy of life insurance made payable on the 48 and declaring that prescription has set in. It
death of the insured shall have been in force during contended that since it was respondent — and not
the lifetime of the insured for a period of two years Sotero — who obtained the insurance, the policy
from the date of its issue or of its last issued was rendered void ab initio  for want of
reinstatement, the insurer cannot prove that the insurable interest.
policy is void ab initio or is rescindible by reason of
Ruling of the Court of Appeals
the fraudulent concealment or misrepresentation of
the insured or his agent. AHDacC On September 28, 2005, the CA issued the assailed
Decision, which contained the following decretal
During the proceedings on the Motion to Dismiss,
portion:
petitioner's investigator testified in court, stating
among others that the insurance underwriter who WHEREFORE, in the light of all the foregoing, the
solicited the insurance is a cousin of respondent's instant appeal is DISMISSED for lack of merit.
husband, Dindo Aban, 15 and that it was the
SO ORDERED. 20 CIaDTE
respondent who paid the annual premiums on the
policy. 16 The CA thus sustained the trial court. Applying
Section 48 to petitioner's case, the CA held that
Ruling of the Regional Trial Court
petitioner may no longer prove that the subject
On December 9, 1997, the trial court issued an policy was void ab initio or rescindible by reason of
Order 17 granting respondent's Motion to Dismiss, fraudulent concealment or misrepresentation after
thus: the lapse of more than two years from its issuance.
It ratiocinated that petitioner was equipped with
WHEREFORE, defendant CRESENCIA P. ABAN's
ample means to determine, within the first two
Motion to Dismiss is hereby granted. Civil Case No.
years of the policy, whether fraud, concealment or
97-867 is hereby dismissed.
misrepresentation was present when the insurance
SO ORDERED. 18 coverage was obtained. If it failed to do so within
the statutory two-year period, then the insured must
In dismissing the case, the trial court found that
be protected and allowed to claim upon the policy.
Sotero, and not respondent, was the one who
procured the insurance; thus, Sotero could legally Petitioner moved for reconsideration, 21 but the CA
take out insurance on her own life and validly denied the same in its November 9, 2006
designate — as she did — respondent as the Resolution. 22 Hence, the present Petition.
beneficiary. It held further that under Section 48,
Issues
petitioner had only two years from the effectivity of
the policy to question the same; since the policy Petitioner raises the following issues for
had been in force for more than two years, resolution: ScTIAH
petitioner is now barred from contesting the same
I
or seeking a rescission or annulment thereof.
[WHETHER] THE COURT OF APPEALS ERRED IN
Petitioner moved for reconsideration, but in another
SUSTAINING THE ORDER OF THE TRIAL COURT
Order 19 dated October 20, 1998, the trial court
DISMISSING THE COMPLAINT ON THE GROUND
stood its ground.
OF PRESCRIPTION IN CONTRAVENTION (OF)
Petitioner interposed an appeal with the CA, PERTINENT LAWS AND APPLICABLE
docketed as CA-G.R. CV No. 62286. Petitioner JURISPRUDENCE.
questioned the dismissal of Civil Case No. 97-867,
II
arguing that the trial court erred in applying Section
[WHETHER] THE COURT OF APPEALS ERRED IN same below, as it had claimed originally that the
SUSTAINING THE APPLICATION OF THE policy was merely voidable.
INCONTESTABILITY PROVISION IN
On the issue of insurable interest, respondent
THE INSURANCE CODE BY THE TRIAL COURT.
echoes the CA's pronouncement that since it was
III Sotero who obtained the insurance, insurable
interest was present. Under Section 10 of
[WHETHER] THE COURT OF APPEALS ERRED IN
the Insurance Code, Sotero had insurable interest in
DENYING PETITIONER'S MOTION FOR
her own life, and could validly designate anyone as
RECONSIDERATION. 23
her beneficiary. Respondent submits that the CA's
Petitioner's Arguments findings of fact leading to such conclusion should
be respected.
In praying that the CA Decision be reversed and
that the case be remanded to the trial court for the Our Ruling
conduct of further proceedings, petitioner argues in
The Court denies the Petition.
its Petition and Reply 24 that Section 48 cannot
apply to a case where the beneficiary under the The Court will not depart from the trial and
insurance contract posed as the insured and appellate courts' finding that it was Sotero who
obtained the policy under fraudulent obtained the insurance for herself, designating
circumstances. It adds that respondent, who was respondent as her beneficiary. Both courts are in
merely Sotero's niece, had no insurable interest in accord in this respect, and the Court is loath to
the life of her aunt. disturb this. While petitioner insists that its
independent investigation on the claim reveals that
Relying on the results of the investigation that it
it was respondent, posing as Sotero, who obtained
conducted after the claim for the insurance
the insurance, this claim is no longer feasible in the
proceeds was filed, petitioner insists that
wake of the courts' finding that it was Sotero who
respondent's claim was spurious, as it appeared
obtained the insurance for herself. This finding of
that Sotero did not actually apply for insurance
fact binds the Court. SHaIDE
coverage, was unlettered, sickly, and had no visible
source of income to pay for the insurance With the above crucial finding of fact — that it was
premiums; and that respondent was an impostor, Sotero who obtained the insurance for herself —
posing as Sotero and fraudulently obtaining petitioner's case is severely weakened, if not totally
insurance in the latter's name without her disproved. Allegations of fraud, which are
knowledge and consent. ESTAIH predicated on respondent's alleged posing as
Sotero and forgery of her signature in the insurance
Petitioner adds that Insurance Policy No. 747411
application, are at once belied by the trial and
was void ab initio and could not have given rise to
appellate courts' finding that Sotero herself took
rights and obligations; as such, the action for the
out the insurance for herself. "[F]raudulent intent on
declaration of its nullity or inexistence does not
the part of the insured must be established to
prescribe. 25
entitle the insurer to rescind the contract." 27 In the
Respondent's Arguments absence of proof of such fraudulent intent, no right
to rescind arises.
Respondent, on the other hand, essentially argues
in her Comment 26 that the CA is correct in Moreover, the results and conclusions arrived at
applying Section 48. She adds that petitioner's new during the investigation conducted unilaterally by
allegation in its Petition that the policy is void ab petitioner after the claim was filed may simply be
initio merits no attention, having failed to raise the dismissed as self-serving and may not form the
basis of a cause of action given the existence and
application of Section 48, as will be discussed at who wield them are made secure by the thought
length below. that they will be paid promptly upon claim. In this
manner, Section 48 contributes to the stability of
Section 48 serves a noble purpose, as it regulates
the insurance industry. aSACED
the actions of both the insurer and the insured.
Under the provision, an insurer is given two years — Section 48 prevents a situation where the insurer
from the effectivity of a life insurance contract and knowingly continues to accept annual premium
while the insured is alive — to discover or prove that payments on life insurance, only to later on deny a
the policy is void ab initio or is rescindible by reason claim on the policy on specious claims of
of the fraudulent concealment or misrepresentation fraudulent concealment and misrepresentation,
of the insured or his agent. After the two-year such as what obtains in the instant case. Thus,
period lapses, or when the insured dies within the instead of conducting at the first instance an
period, the insurer must make good on the policy, investigation into the circumstances surrounding
even though the policy was obtained by fraud, the issuance of Insurance Policy No. 747411 which
concealment, or misrepresentation. This is not to would have timely exposed the supposed flaws and
say that insurance fraud must be rewarded, but that irregularities attending it as it now professes,
insurers who recklessly and indiscriminately solicit petitioner appears to have turned a blind eye and
and obtain business must be penalized, for such opted instead to continue collecting the premiums
recklessness and lack of discrimination ultimately on the policy. For nearly three years, petitioner
work to the detriment of bona fide takers of collected the premiums and devoted the same to
insurance and the public in general. its own profit. It cannot now deny the claim when it
is called to account. Section 48 must be applied to
Section 48 regulates both the actions of the
it with full force and effect.
insurers and prospective takers of life insurance. It
gives insurers enough time to inquire whether the The Court therefore agrees fully with the appellate
policy was obtained by fraud, concealment, or court's pronouncement that —
misrepresentation; on the other hand, it forewarns
[t]he "incontestability clause" is a provision in law
scheming individuals that their attempts at
that after a policy of life insurance made payable
insurance fraud would be timely uncovered — thus
on the death of the insured shall have been in force
deterring them from venturing into such nefarious
during the lifetime of the insured for a period of two
enterprise. At the same time, legitimate policy
(2) years from the date of its issue or of its last
holders are absolutely protected from unwarranted
reinstatement, the insurer cannot prove that the
denial of their claims or delay in the collection of
policy is void ab initio  or is rescindible by reason of
insurance proceeds occasioned by allegations of
fraudulent concealment or misrepresentation of the
fraud, concealment, or misrepresentation by
insured or his agent.
insurers, claims which may no longer be set up
after the two-year period expires as ordained under The purpose of the law is to give protection to the
the law. insured or his beneficiary by limiting the rescinding
of the contract of insurance on the ground of
Thus, the self-regulating feature of Section 48 lies
fraudulent concealment or misrepresentation to a
in the fact that both the insurer and the insured are
period of only two (2) years from the issuance of
given the assurance that any dishonest scheme to
the policy or its last reinstatement.
obtain life insurance would be exposed, and
attempts at unduly denying a claim would be struck The insurer is deemed to have the necessary
down. Life insurance policies that pass the facilities to discover such fraudulent concealment
statutory two-year period are essentially treated as or misrepresentation within a period of two (2)
legitimate and beyond question, and the individuals years. It is not fair for the insurer to collect the
premiums as long as the insured is still alive, only evidence or that its conclusions are contrary to
to raise the issue of fraudulent concealment or applicable law and jurisprudence. The plaintiff-
misrepresentation when the insured dies in order to appellant failed to discharge that
defeat the right of the beneficiary to recover under burden. 28 ETaSDc
the policy.
Petitioner claims that its insurance agent, who
At least two (2) years from the issuance of the solicited the Sotero account, happens to be the
policy or its last reinstatement, the beneficiary is cousin of respondent's husband, and thus
given the stability to recover under the policy when insinuates that both connived to commit insurance
the insured dies. The provision also makes clear fraud. If this were truly the case, then petitioner
when the two-year period should commence in would have discovered the scheme earlier if it had
case the policy should lapse and is reinstated, that in earnest conducted an investigation into the
is, from the date of the last reinstatement. cSIACD circumstances surrounding the Sotero policy. But
because it did not and it investigated the Sotero
After two years, the defenses of concealment or
account only after a claim was filed thereon more
misrepresentation, no matter how patent or well-
than two years later, naturally it was unable to
founded, will no longer lie.
detect the scheme. For its negligence and inaction,
Congress felt this was a sufficient answer to the the Court cannot sympathize with its plight.
various tactics employed by insurance companies Instead, its case precisely provides the strong
to avoid liability. argument for requiring insurers to diligently
conduct investigations on each policy they issue
The so-called "incontestability clause" precludes
within the two-year period mandated under Section
the insurer from raising the defenses of false
48, and not after claims for insurance proceeds are
representations or concealment of material facts
filed with them.
insofar as health and previous diseases are
concerned if the insurance has been in force for at Besides, if insurers cannot vouch for the integrity
least two years during the insured's lifetime. The and honesty of their insurance agents/salesmen
phrase "during the lifetime" found in Section 48 and the insurance policies they issue, then they
simply means that the policy is no longer should cease doing business. If they could not
considered in force after the insured has died. The properly screen their agents or salesmen before
key phrase in the second paragraph of Section 48 is taking them in to market their products, or if they
"for a period of two years." do not thoroughly investigate the insurance
contracts they enter into with their clients, then they
As borne by the records, the policy was issued on
have only themselves to blame. Otherwise said,
August 30, 1993, the insured died on April 10, 1996,
insurers cannot be allowed to collect premiums on
and the claim was denied on April 16, 1997. The
insurance policies, use these amounts collected
insurance policy was thus in force for a period of 3
and invest the same through the years, generating
years, 7 months, and 24 days. Considering that the
profits and returns therefrom for their own benefit,
insured died after the two-year period, the plaintiff-
and thereafter conveniently deny insurance claims
appellant is, therefore, barred from proving that the
by questioning the authority or integrity of their own
policy is void ab initio by reason of the insured's
agents or the insurance policies they issued to their
fraudulent concealment or misrepresentation or
premium-paying clients. This is exactly one of the
want of insurable interest on the part of the
schemes which Section 48 aims to prevent.
beneficiary, herein defendant-appellee.
Insurers may not be allowed to delay the payment
Well-settled is the rule that it is the plaintiff-
of claims by filing frivolous cases in court, hoping
appellant's burden to show that the factual findings
that the inevitable may be put off for years — or
of the trial court are not based on substantial
even decades — by the pendency of these On October 25, 1993, while the policy was in force,
unnecessary court cases. In the meantime, they a fire broke out while M/V Asia Korea was
benefit from collecting the interest and/or returns undergoing repairs at the port of Cebu. TRANS-
on both the premiums previously paid by the ASIA filed its notice of claim for damage sustained
insured and the insurance proceeds which should by the vessel. Plaintiff TRANS-ASIA reserved its
otherwise go to their beneficiaries. The business of right to subsequently notify PRUDENTIAL as to the
insurance is a highly regulated commercial activity full amount of the claim upon final survey and
in the country, 29 and is imbued with public determination by average adjuster Phil. of the
interest. 30 "[A]n insurance contract is a contract of damage sustained by reason of fire. An adjuster's
adhesion which must be construed liberally in favor report on the fire in question was submitted by
of the insured and strictly against the insurer in Richard Hogg International together with the U-
order to safeguard the [former's] Marine Surveyor Report.
interest." 31 cHCIDE
On May 29, 1995 TRANS-ASIA executed a
WHEREFORE, the Petition is DENIED. The assailed document denominated "Loan and Trust receipt”.
September 28, 2005 Decision and the November 9, Defendant [PRUDENTIAL] denied plaintiff's claim.
2006 Resolution of the Court of Appeals in CA-G.R. This was followed by defendant's letter requesting
CV No. 62286 are AFFIRMED. the return or payment of the P3,000,000.00 within a
period of ten (10) days from receipt of the letter.
SO ORDERED.
On 13 August 1997, TRANS-ASIA filed a Complaint
Carpio, Brion, Perez and Perlas-Bernabe, JJ., concur.
for Sum of Money against PRUDENTIAL with the
|||  (Manila Bankers Life Insurance Corp. v. Aban, RTC of Cebu City.
G.R. No. 175666, [July 29, 2013], 715 PHIL 404-419)
PRUDENTIAL denied the material allegations of the
Warranty Complaint and interposed the defense that TRANS-
FIRST DIVISION ASIA breached insurance policy conditions, in
particular: "WARRANTED VESSEL CLASSED AND
[G.R. No. 151890. June 20, 2006.]
CLASS MAINTAINED." PRUDENTIAL further alleged
PRUDENTIAL GUARANTEE and ASSURANCE that it acted as facts and law require and incurred
INC.,  petitioner, vs.  TRANS-ASIA  SHIPPING LINES, no liability to TRANS-ASIA; that TRANS-ASIA has no
INC.,  respondent. cause of action; and, that its claim has been
effectively waived and/or abandoned, or it is
[G.R. No. 151991. June 20, 2006.]
estopped from pursuing the same.
TRANS-ASIA SHIPPING LINES,
The Trial Court ruled finding for (therein defendant)
INC.,  petitioner, vs.  PRUDENTIAL  GUARANTEE and
PRUDENTIAL. It ruled that a determination of the
ASSURANCE INC.,  respondent.
parties' liabilities hinged on whether TRANS-ASIA
DECISION violated and breached the policy conditions on
WARRANTED VESSEL CLASSED AND CLASS
CHICO-NAZARIO,  J  p:.
MAINTAINED. It interpreted the provision to mean
Facts: TRANS-ASIA is the owner of the vessel that TRANS-ASIA is required to maintain the vessel
M/V Asia Korea. In consideration of payment of at a certain class at all times pertinent during the
premiums, defendant PRUDENTIAL insured life of the policy. According to the court a quo,
M/V Asia Korea for loss/damage of the hull and TRANS-ASIA failed to prove compliance of the
machinery arising from perils, inter alia, of fire and terms of the warranty, the violation thereof entitled
explosion for the sum of P40 Million. PRUDENTIAL, the insured party, to rescind the
contract.
The Court of Appeals in its assailed reversed the It was likewise the responsibility of the average
Judgment of the RTC. It ruled that PRUDENTIAL, as adjuster, Richards Hogg International (Phils.), Inc.,
the party asserting the non-compensability of the to secure a copy of such certification, and the
loss had the burden of proof to show that TRANS- alleged breach of TRANS-ASIA cannot be gleaned
ASIA breached the warranty, which burden it failed from the average adjuster’s survey report, or
to discharge.  adjustment of particular average per "M/V Asia
Korea" of the 25 October 1993 fire on board.
In the same token, the Court of Appeals found the
subject warranty allegedly breached by TRANS- The Supreme Court is not unmindful of the clear
ASIA to be a rider which, while contained in the language of Sec. 74 of the Insurance Code which
policy, was inserted by PRUDENTIAL without the provides that, "the violation of a material warranty or
intervention of TRANS-ASIA. As such, it partakes of other material provision of a policy on the part of
a nature of a contract d'adhesion which should be either party thereto, entitles the other to rescind."
construed against PRUDENTIAL, the party which
It is generally accepted that "a warranty is a
drafted the contract. Likewise, according to the
statement or promise set forth in the policy, or by
Court of Appeals, PRUDENTIAL's renewal of the
reference incorporated therein, the untruth or non-
insurance policy from noon of 1 July 1994 to noon
fulfillment of which in any respect, and without
of 1 July 1995, and then again, until noon of 1 July
reference to whether the insurer was in fact
1996 must be deemed a waiver by PRUDENTIAL of
prejudiced by such untruth or non- fulfillment,
any breach of warranty committed by TRANS-ASIA.
renders the policy voidable by the insurer."
Issue: WON Trans-Asia violated an express and
However, it is similarly indubitable that for the
material warranty in the subject insurance. NO.
breach of a warranty to avoid a policy, the same
Ruling: PRUDENTIAL failed to establish that must be duly shown by the party alleging the
TRANS-ASIA violated and breached the policy same. We cannot sustain an allegation that
condition on WARRANTED VESSEL CLASSED AND is unfounded. Consequently, PRUDENTIAL, not
CLASS MAINTAINED, as contained in the subject having shown that TRANS-ASIA breached the
insurance contract. warranty condition, CLASSED AND CLASS
MAINTAINED, it remains that TRANS-ASIA must be
As found by the Court of Appeals and as supported
allowed to recover its rightful claims on the policy.
by the records, Bureau Veritas is a classification
society recognized in the marine industry. As it is Assuming arguendo that  TRANS-ASIA  violated the
undisputed that TRANS-ASIA was properly classed policy condition on WARRANTED VESSEL CLASSED
at the time the contract of insurance was entered AND CLASS MAINTAINED,  PRUDENTIAL  made a
into, thus, it becomes incumbent upon valid waiver of the same.
PRUDENTIAL to show evidence that the status of
PRUDENTIAL can be deemed to have made a valid
TRANS-ASIA as being properly CLASSED by Bureau
waiver of TRANS-ASIA’s breach of warranty as alleged.
Veritas had shifted in violation of the warranty. Because after the loss, Prudential renewed the
Unfortunately, PRUDENTIAL failed to support the insurance policy of Trans-Asia for two (2) consecutive
allegation. years, from noon of 01 July 1994 to noon of 01 July
1995, and then again until noon of 01 July 1996. This
The lack of a certification in PRUDENTIAL’s records
renewal is deemed a waiver of any breach of warranty.
to the effect that TRANS-ASIA’s "M/V Asia Korea"
was CLASSED AND CLASS MAINTAINED at the PRUDENTIAL, in renewing TRANS-ASIA’s insurance
time of the occurrence of the fire cannot be policy for two consecutive years after the loss covered
tantamount to the conclusion that TRANS-ASIA in by Policy No. MH93/1363, was considered to have
fact breached the warranty contained in the policy. waived TRANS-ASIA’s breach of the subject warranty, if
any. Breach of a warranty or of a condition renders the mortgages on certain properties, which are more
contract defeasible at the option of the insurer; but if he particularly described and listed at the back of the
so elects, he may waive his privilege and power to mortgage contract . . .; (2) That as additional
rescind by the mere expression of an intention so to do. condition of the mortgage contract, the Union
In that event his liability under the policy continues as Manufacturing Co., Inc. undertook to secure
before. There can be no clearer intention of the waiver
insurance coverage over the mortgaged properties
of the alleged breach than the renewal of the policy
for the same amount of P415,000.00 distributed as
insurance granted by PRUDENTIAL to TRANS-ASIA in
follows: (a) Buildings, P30,000.00; (b) Machineries,
MH94/1595 and MH95/1788, issued in the years 1994
and 1995, respectively. P300,000.00; and (c) Merchandise Inventory,
P85,000.00, giving a total of P415,000.00; (3) That
EN BANC as Union Manufacturing Co., Inc. failed to secure
[G.R. No. L-27932. October 30, 1972.] insurance coverage on the mortgaged properties
since January 12, 1962, despite the fact that Cua
UNION MANUFACTURING CO., INC. and the Tok, its general manager, was reminded of said
REPUBLIC BANK, plaintiffs, REPUBLIC requirement, the Republic Bank procured from the
BANK,  plaintiff-appellant, vs. PHILIPPINE defendant, Philippine Guaranty Co., Inc. an
GUARANTY CO., INC.,  defendant-appellee. insurance coverage on loss against fire for
Armando L.  Abad, Sr.  for plaintiff-appellant. P500,000.00 over the properties of the Union
Manufacturing Co., Inc., as described in defendant's
Gamelo, Francisco & Aquino  for defendant-appellee. 'Cover Note' dated September 25, 1962, with the
DECISION annotation that loss or damage, if any, under said
Cover Note is payable to Republic Bank as its
FERNANDO, J  p: interest may appear, subject however to the printed
conditions of said defendant's Fire Insurance Policy
In a suit arising from a fire insurance policy, the
Form; (4) That on September 27, 1962, Fire
insurer, Philippine Guaranty Co., Inc., defendant in
Insurance Policy No. 43170 . . . was issued for the
the lower court and now appellee, was able to avoid
sum of P500,000.00 in favor of the assured, Union
liability upon proof that there was a violation of a
Manufacturing Co., Inc., for which the
warranty. There was no denial thereof from the
corresponding premium in the sum of P8,328.12,
insured, Union Manufacturing Co., Inc. With such a
which was reduced to P6,688.12, was paid by the
legally crippling blow, the effort of the Republic
Republic Bank to the defendant, Philippine Guaranty
Bank, the main plaintiff and now the sole appellant,
Co., Inc. . . .; (5) That upon the expiration of said fire
to recover on such policy as mortgagee, by virtue of
policy on September 25, 1963, the same was
the cover note in the insurance policy providing that
renewed by the Republic Bank upon payment of the
it is entitled to the payment of loss or damages as
corresponding premium in the same amount of
its interest may appear, was in vain. The defect
P6,663.52 on September 26, 1963; (6) That in the
being legally incurable, its appeal is likewise futile.
corresponding voucher . . ., it appears that although
We affirm.
said renewal premium was paid by the Republic
As noted in the decision, the following facts are not Bank, such payment vas for the account of Union
disputed: "(1) That on January 12, 1962, the Union Manufacturing Co., Inc. and that the cash voucher
Manufacturing Co., Inc. obtained certain loans, for the payment of the first premium was paid also
overdrafts and other credit accommodations from by the Republic Bank but for the account of Union
the Republic Bank in the total sum of P415,000.00 Manufacturing Co., Inc.; (7) That sometime on
with interest at 9% per annum from said date and to September 6, 1964, a fire occurred in the premises
secure the payment thereof, said Union of the Union Manufacturing Co., Inc.; (8) That on
Manufacturing Co., Inc. executed a real and chattel October 6, 1964, the Union Manufacturing Co., Inc.
filed its fire claim with the defendant Philippine note 2 and in the fire insurance policy 3 the
Guaranty Co., Inc., thru its adjuster, H. H. Bayne following warranty: "[Co-Insurance Declared]: Nil." 4
Adjustment Co., which was denied by said
Why the appellant Republic Bank could not recover,
defendant in its letter dated November 27, 1964 . . .,
as payee, in case of loss as its "interest may appear
on the following grounds: 'a. Policy Condition No. 3
subject to the terms and conditions, clauses and
and/or the 'Other Insurance Clause' of the policy
warranties" of the policy was expressed in the
was violated because you did not give ,notice to us
appealed decision thus: "However, inasmuch as the
the other insurance which you had taken from New
Union Manufacturing Co., Inc. has violated the
India for P80,000.00, Sincere Insurance for
condition of the policy to the effect that it did not
P25,000.00 and Manila Insurance for P200,000.00
reveal the existence of other insurance policies
with the result that these insurances, of which we
over the same properties, as required by the
became aware of only after the fire, were not
warranty appearing on the face of the policy issued
endorsed on our policy; and (b) Policy Condition
by the defendant and that on the other hand said
No. 11 was not complied with because you have
Union Manufacturing Co., Inc. represented that
failed to give to our representatives the required
there were no other insurance policies at the time
documents and other proofs with respect to your
of the issuance of said defendant's policy, and it
claim and matters touching on our liability, if any,
appearing furthermore that while the policy of the
and the amount of such liability'; (9) That as of
defendant was in full force and effect the Union
September, 1962, when the defendant Philippine
Manufacturing Co., Inc. secured other fire insurance
Guaranty Co., issued Fire Insurance Policy No.
policies without the written consent of the
43170 . . . in the sum of P500,000.00 to cover the
defendant endorsed on the policy, the conclusion is
properties of the Union Manufacturing Co., Inc., the
inevitable that both the Republic Bank and Union
same properties were already covered by Fire
Manufacturing Co., Inc. cannot recover from the
Policy No. 1533 of the Sincere Insurance Company
same policy of the defendant because the same is
for P25,000.00 for the period from October 7, 1961
null and void." 5 The tone of confidence apparent in
to October 7, 1962 . . .; and by insurance policies
the above excerpts from the lower court decision is
Nos. F-2314 . . . and F-2590 . . . of the Oceanic
understandable. The conclusion reached by the
Insurance Agency for the total sum of P300,000.00
lower court finds support in authoritative
and for periods respectively, from January 27, 1962
precedents. It is far from easy, therefore, for
to January 27, 1963, and from June 1, 1962 to June
appellant Republic Bank to impute to such a
1, 1963; and (10) That when said defendant's Fire
decision a failure to abide by the law. Hence, as
Insurance Policy No. 43170 was already in full force
noted at the outset, the appeal cannot prosper. An
and effect, the Union Manufacturing Co., Inc.
affirmance is indicated.
without the consent of the defendant, Philippine
Guaranty Co., Inc., obtained other insurance It is to Santa Ana v. Commercial Union Assurance
policies totalling P305,000.00 over the same Co., 6 a 1930 decision, that one turns to for the first
properties prior to the fire, to wit: (1) Fire Policy No. explicit formulation as to the controlling principle.
250 of New India Assurance Co., Ltd., for As was made clear in the opinion of this Court,
P80,000.00 for the period from May 27, 1964 to penned by Justice Villa-Real: "Without deciding
May 27, 1965 . . .; (2) Fire Policy No. 3702 of the whether notice of other insurance upon the same
Sincere Insurance Company for P25,000.00 for the property must be given in writing, or whether a
period from October 7, 1963 to October 7, 1964 . . .; verbal notice is sufficient to render an insurance
and (3) Fire Policy No. 6161 of Manila Insurance valid which requires such notice, whether oral or
Co. for P200,000.00 for the period from May 15, written, we hold that in the absolute absence of
1964 to May 15, 1965 . . . ." 1 There is in the cover such notice when it is one of the conditions
specified in the fire insurance policy, the policy is
null and void." 7 The next year, in Ang Giok Chip v. open to doubt." 13 As a matter of fact, in a 1966
Springfield Fire & Marine Ins. Co., 8 the conformity decision, Misamis Lumber Corp. v. Capital Ins. &
of the insured to the terms of the policy, implied Surety Co., Inc., 14 Justice J.B.L. Reyes, for this
from the failure to express any disagreement with Court, made manifest anew its adherence to such a
what is provided for, was stressed in these words principle in the face of an assertion that thereby a
of the  ponente, Justice Malcolm: "It is admitted that highly unfavorable provision for the insured would
the policy before us was accepted by the plaintiff. be accorded recognition. This is the language used:
The receipt of this policy by the insured without "The insurance contract may be rather ponerous
objection binds both the acceptor and the insured ('one sided', as the lower court put it), but that in
to the terms thereof. The insured may not itself does not justify the abrogation of its express
thereafter be heard to say that he did not read the terms, terms which the insured accepted or
policy or know its terms, since it is his duty to read adhered to and which is the law between the
his policy and it will be assumed that he did contracting parties." 15
so." 9 As far back as 1915, in Young v. Midland
There is no escaping the conclusion then that the
Textile Insurance Company, 10 it was categorically
lower court could not have disposed of this case in
set forth that as a condition precedent to the right
a way other than it did. Had it acted otherwise, it
of recovery, there must be compliance on the part
clearly would have disregarded pronouncements of
of the insured with the terms of the policy. As
this Court, the compelling force of which cannot be
stated in the opinion of the Court through Justice
denied. There is, to repeat, no justification for a
Johnson: "If the insured has violated or failed to
reversal.
perform the conditions of the contract, and such a
violation or want of performance has not been WHEREFORE, the decision of the lower court of
waived by the insurer, then the insured cannot March 31, 1967 is affirmed. No costs.
recover. Courts are not permitted to make
Concepcion, C.J., Zaldivar, Barredo, Makasiar,
contracts for the parties. The function and duty of
Antonio and Esguerra, JJ., concur.
the courts consist simply in enforcing and carrying
out the contracts actually made. While it is true, as Castro and Teehankee, JJ., reserve their votes.
a general rule, that contracts of insurance are
Makalintal, J., is on official leave.
construed most favorably to the insured, yet
contracts of insurance, like other contracts, are to |||  (Union Manufacturing Co., Inc. v. Philippine
be construed according to the sense and meaning Guaranty Co., Inc., G.R. No. L-27932, [October 30,
of the terms which the parties themselves have 1972], 150-C PHIL 69-74)
used. If such terms are clear and unambiguous
In Fire Insurance
they must be taken and understood in their plain,
FIRST DIVISION
ordinary and popular sense." 11 More specifically,
there was a reiteration of this Santa Ana ruling in a [G.R. No. L-5715. December 20, 1910.]
decision by the then Justice, later Chief Justice,
E. M. BACHRACH,  plaintiff-appellee, vs. BRITISH
Bengzon, in General Insurance & Surety Corp. v. Ng
AMERICAN ASSURANCE COMPANY, a
Hua. 12 Thus: "The annotation then, must be
corporation,  defendant-appellant.
deemed to be a warranty that the property was not
insured by any other policy. Violation thereof Haussermann, Ortigas, Cohn & Fisher,  for appellant.
entitles the insurer to rescind. (Sec. 69, Insurance
Kincaid & Hurd  and  Thomas L. Hartigan,  for
Act) Such misrepresentation is fatal in the light of
appellee.
our views in Santa Ana v. Commercial Union
Assurance Company, Ltd. . . . The materiality of SYLLABUS
non-disclosure of other insurance policies is not
1. FIRE INSURANCE; CONDITIONS RELIED UPON Company (hereinafter called the company), the sum
MUST BE EXPRESSED IN POLICY. — When property of two thousand pesos Philippine currency, for
is insured any condition upon which the insurer insuring against loss or damage by fire, as
wishes to rely, in order to avoid liability in case of a hereinafter mentioned, the property hereinafter
loss, must be expressed in the policy. described in the sum of several sums following, viz:

2. ID.; ALIENATION; EXECUTION OF A CHATTEL "Ten thousand pesos Philippine currency, on goods,
MORTGAGE UPON INSURED PROPERTY. — Interest belonging to a general furniture store, such as iron
in property insured does not pass by the mere and brass bedsteads, toilet tables, chairs, ice
execution of a chattel mortgage, and, while the boxes, bureaus, washstands, mirrors, and sea-grass
chattel mortgage is a conditional sale, there is no furniture (in accordance with warranty 'D' of the
alienation, within the meaning of the insurance law, tariff attached hereto) the property of the assured,
until the mortgagee acquires a right to take in trust, on commission or for which he is
possession by default under the terms of the responsible, whilst stored in the ground floor and
mortgage. first story of house and dwelling No. 16 Calle
Martinez, district 3, block 70, Manila, built, ground
3. ID.; SUFFICIENCY OF EVIDENCE IN A CIVIL SUIT
floor of stone and or brick, first story of hard wood
FOLLOWING A CRIMINAL PROSECUTION. — The
and roofed with galvanized iron — bounded in the
evidence in a civil suit, following an unsuccessful
front by the said calle, on one side by Calle David
criminal prosecution involving the same subject
and on the other two sides by buildings of similar
matter, should not be materially less convincing
construction and occupation.
than that required to convict the accused of the
alleged crime. "Co-insurances allowed, particulars of which to be
declared in the event of loss or claim.
4. ID.; NOTICE OF LOSS; WAIVER OF NOTICE BY
INSURERS. — Where the terms of an insurance "The company hereby agrees with the insured (but
policy require that notice of loss be given, a denial subject to the conditions on the back hereof, which
of liability by the insurers under the policy operates are to be taken as a part of this policy) that if the
as a waiver of notice of loss because if the policy is property above described, or any part thereof, shall
null and void the furnishing of such notice would be be destroyed or damaged by fire, at any time
vain and useless. Immediate notice means within a between the 21st day of February, 1908, and 4
reasonable time. o'clock in the afternoon of the 21st day of February,
1909, or (in case of the renewal of this policy) at
DECISION
any time afterwards, so long as, and during the
JOHNSON,  J  p: period in respect of which the insured shall have
paid to the company, and they shall have accepted,
On the 13th of July, 1908, the plaintiff commenced
the sum required for the renewal of this policy, the
an action against the defendant to recover the sum
company will, out of their capital stock, and funds,
of P9,841.50, the amount due, deducting the
pay or make good to the insured the value of the
salvage, upon the following fire insurance policy
property so destroyed, or the amount of such
issued by the defendant to the plaintiff:
damage thereto, to any amount not exceeding, in
"[Fire policy No. 3007499.] respect of each or any of the several matters above
specified, the sum set opposite thereto,
"This policy of insurance witnesseth, that E. M.
respectively, and not exceeding in the whole the
Bachrach, esq., Manila (hereinafter called the
sum of ten thousand pesos, and also not
insured), having paid to the undersigned, as
exceeding, in any case, the amount of the insurable
authorized agent of the British American Assurance
interest therein of the insured at the time of the goods covered by the said policy to one Macke, to
happening of such fire. secure certain obligations assumed by the said
Macke for and on behalf of the insured. That the
"In witness whereof, the British American
sanction of the said defendant had not been
Assurance Company has caused these presents to
obtained by the plaintiff, as required by the said
be signed this 21st day of February, in the year of
policy.
our Lord 1908.
Third. That the plaintiff, on the 18th of April, 1908,
"For the company.
and immediately preceding the outbreak of the
"W. F. STEVENSON & CO., LTD., alleged fire, willfully placed a gasoline can
containing 10 gallons of gasoline in the upper story
"By________________,
of said building in close proximity to a portion of
"Manager Agents." said goods, wares, and merchandise, which can
was so placed by the plaintiff as to permit the
And indorsed on the back the following:
gasoline to run on the floor of said second story,
"The within policy covers and includes a 'Calalac' and after so placing said gasoline, he, the plaintiff,
automobile to the extent of (1,250) twelve hundred placed in close proximity to said escaping gasoline
and fifty pesos Philippine currency. a lighted lamp containing alcohol, thereby greatly
increasing the risk of fire.
"Memo: Permission is hereby granted for the use of
gasoline not to exceed 10 gallons for the above Fourth. That the plaintiff made no proof of the loss
automobile, but only whilst contained in the within the time required by condition five of said
reservoir of the car. It is further warranted that the policy, nor did the insured file a statement with the
car be neither filled nor emptied in the within- municipal or any other judge or court of the goods
described building or this policy be null and void. alleged to have been in said building at the time of
the alleged fire, nor of the goods saved, nor the loss
"Manila, 27th February, 1908.
suffered.
"W. F. STEVENSON & CO., LTD.,
The plaintiff, after denying nearly all of the facts set
"By ______________, out in the special answer of the defendant, alleged:

"Manager Agents." First. That he had been acquitted in a criminal

action against him, after a trial duly and regularly
The defendant answered the complaint, admitting
had, upon a charge of arson, based upon the same
some of the facts alleged by the plaintiff and
alleged facts set out in the answer of the
denying others. The defendant also alleged certain
defendant.
facts under which it claimed that it was released
from all obligations whatever under said policy. Second. That he had made no proof of the loss set
These special facts are as follows: up in his complaint for the reason that immediately
after the had, on the 20th of April, 1908, given the
First. That the plaintiff maintained a paint and
defendant due notice in writing of said loss, the
varnish shop in the said building where the goods
defendant, on the 21st of April, 1908, and thereafter
which were insured were stored.
on other occasions, had waived all right to require
Second. That the plaintiff transferred his interest in proof of said loss by denying all liability under the
and to the property covered by the policy to H. W. policy and by declaring said policy to be null and
Peabody & Co. to secure certain indebtedness due void.
and owing to said company, and also that the
After hearing the evidence adduced during the trial
plaintiff had transferred his interest in certain of the
of the cause, the lower court found that the
defendant was liable to the plaintiff and rendered a 7. The court erred in holding the defendant liable
judgment against the defendant for the sum of for the loss under the policy.
P9,841.50, with interest for a period of one year at 6
8. The court erred in refusing to deduct from the
per cent, making a total of P10,431.99, with costs.
loss sustained by Bachrach the value of the
From that decision the defendant appealed and automobile, which was saved without damage.
made the following assignments of error:
9. The court erred in refusing to grant the motion
1. The court erred in failing to hold that the use of for a new trial.
the building, No. 16 Calle Martinez, as a paint and
10. The court erred in refusing to enter judgment in
varnish shop annulled the policy of insurance.
favor of the defendant and against the plaintiff.
2. The court erred in failing to hold that the
 
execution of the chattel mortgages without the
knowledge and consent of the insurance company With reference to the first above assignment of
and without receiving the sanction of said company error, the lower court in its decision said:
annulled the policy of insurance.
"It is claimed that either gasoline or alcohol was
3. The court erred in holding that the keeping of kept in violation of the policy in
gasoline and alcohol not in bottles in the building the bodega containing the insured property. The
No. 16 Calle Martinez was not such a violation of testimony on this point is somewhat conflicting, but
the conditions of the policy as to render the same conceding all of the defendant's claims, the
null and void. construction given to this claim by American courts
would not justify the forfeiture of the policy on that
4. The court erred in failing to find as a fact that E.
ground. The property insured consisted mainly of
M. Bachrach, the insured, willfully placed a gasoline
household furniture kept for the purpose of sale.
can containing about 10 gallons of gasoline in the
The preservation of the furniture in a salable
upper story of said building, No. 16 Calle Martinez,
condition by retouching or otherwise was incidental
in close proximity to a portion of the goods, wares,
to the business. The evidence offered by the
and merchandise stored therein, and that said can
plaintiff is to the effect that alcohol was used in
was so placed by said Bachrach as to permit the
preparing varnish for the purpose of retouching,
gasoline to run on the floor of said second story.
though he also says that the alcohol was kept in the
5. The court erred in failing to find as a fact that E. store and not in the bodega where the furniture
M. Bachrach, after placing said gasoline can in was. It is well settled that the keeping of
close proximity to the goods, wares, and inflammable oils on the premises, though
merchandise covered by the policy of insurance, prohibited by the policy,  does not void it if such
that he (Bachrach) placed in close proximity to said keeping is incidental to the business.  Thus, where a
escaping gasoline a lighted lamp containing furniture factory keeps benzine for the purposes of
alcohol, thereby greatly increasing the risk of fire. operation (Davis vs. Pioneer Furniture Company, 78
N. W. Rep., 596; Faust vs. American Fire Insurance
6. The court erred in holding that the policy of
Company, 91 Wis., 158), or where it is used for
insurance was in force at the time of said fire, and
cleaning machinery (Mears vs. Humboldt Insurance
that the acts or omissions on the part of the
Company, 92 Pa. St., 15; 37 Am. Rep., 647), the
insured which caused, or tended to cause, the
insurer can not on that ground avoid payment of a
forfeiture of the policy, were waived by the
loss, though the keeping of the benzine on the
defendant.
premises is expressly prohibited. These authorities
also appear sufficient to answer the objection that
the insured automobile contained gasoline and that
the plaintiff on one occasion was seen in is a conditional sale, there is no alienation within
the bodega with a lighted lamp. The first was the meaning of the insurance law until the
incidental to the use of the insured article and the mortgagee acquires a right to take possession by
second being a single instance falls within the default under the terms of the mortgage. No such
doctrine of the case last cited." right is claimed to have accrued in the case at bar,
and the alienation clause is therefore inapplicable."
It may be added that there was no provision in the
policy prohibiting the keeping of paints and With reference to the third assignment of error
varnishes upon the premises where the insured above noted, upon a reading of the decision of the
property was stored. If the company intended to lower court it will be found that there is nothing in
rely upon a condition of that character, it ought to the decision of the lower court reacting to the facts
have been plainly expressed in the policy. stated in this assignment of error, neither is there
any provision in the policy relating to the facts
With reference to the second above assignment of
alleged in said assignment of error.
error, the defendant and appellant contends that
the lower court erred in failing to hold that the Assignments of error numbers 4 and 6 above noted
execution of the said chattel mortgage, without the may be considered together.
knowledge and consent of the insurance company
The record discloses that some time prior to the
and without receiving the sanction of said
commencement of this present action, a criminal
company, annulled the said policy of insurance.
action was commenced against the plaintiff herein
With reference to this assignment of error, upon in the Court of First Instance of the city of Manila, in
reading the policy of insurance issued by the which he was charged with willfully and maliciously
defendant to the plaintiff, it will be noted that there burning the property covered by the policy in the
is no provision in said policy prohibiting the plaintiff present case. At the conclusion of the criminal
from placing a mortgage upon the property insured, action and after hearing the evidence adduced
but, admitting that such a provision was intended, during the trial, the lower court, with the assistance
we think the lower court has completely answered of two assessors, found that the evidence was
this contention of the defendant. He said, in insufficient to show beyond peradventure of doubt
passing upon this question as it was presented: that the defendant was guilty of the crime. The
evidence adduced during the trial of the criminal
"It is claimed that the execution of a chattel
cause was introduced as evidence in the present
mortgage on the insured property violated what is
cause. While the evidence  shows some very
known as the 'alienation clause,' which is now
peculiar and suspicious circumstances concerning
found in most policies, and which is expressed in
the burning of the goods covered by the said
the policies involved in cases 6496 and 6497 by a
policy, yet, nevertheless, in view of the findings of
phrase imposing forfeiture if the interest in the
the lower court and in view of the apparent conflict
property pass from the insured. (Cases 6496 and
in the testimony, we can not find that there is a
6497, in which are involved other actions against
preponderance of evidence showing that the
other insurance companies for the same loss as in
plaintiff did actually set fire or cause fire to be set
the present action.)
to the goods in question. The lower court, in
"This clause has been the subject of a vast number discussing this question, said:
of judicial decisions (13 Am. & Eng. Encyc. of Law,
"As to the claim that the loss occurred through the
2d ed., pp. 239 et seq.), and it is held by the great
voluntary act of the insured, we consider it
weight of authority that the interest in property
unnecessary to review the evidence in detail. That
insured does not pass by the mere execution of a
was done by another branch of this court in
chattel mortgage and that while a chattel mortgage
disposing of the criminal prosecution brought
against the insured, on the same ground, based circumstances thereof. A denial of liability on other
mainly on the same evidence. And regardless of grounds waives this requirement (O'Neil vs. Buffalo
whether or not the judgment in that proceeding Fire Insurance Company, 3 N. Y., 122; Peoria Marine
is  res adjudicata  as to anything here, we are at Ins. Co. vs. Whitehill, 25 Ill., 382), as well as that
least of the opinion that the evidence to establish relating to the production of books and papers (Ga.
this defense should not be materially less Home Ins. Co. vs. Goode & Co., 95 Va., 751; 66 Jur.
convincing than that required in order to convict the Civ., 16). Besides, the insured might have had
insured of the crime of arson. (Turtell vs. difficulty in attempting to comply with this clause,
Beamount, 25 Rev. Rep., 644.) In order to find that for there is no longer an official here with the title of
the defense of incendiarism was established here, 'juez municipal.'"
we would be obliged, therefore, in effect to set
Besides the foregoing reasons, it may be added
aside the findings of the judge and assessors in the
that there was no requirement in the policy in
criminal cause, and this we would be loath to do
question that such notice be given.
even though the evidence now produced were
much stronger than it is." With reference to the assignments of error
numbers 7, 9, and 10, they are too general in their
With reference to the sixth assignment of error
character to merit consideration.
above noted, to wit: That the court erred in holding
that the policy of insurance was in force at the time With reference to the eighth assignment of error
of said fire and that the acts or omissions on the above noted, the defendant and appellant contends
part of the insured which caused or tended to that he was entitled to have the amount of his
cause a forfeiture of the policy were waived by the responsibility reduced by the full value (P1,250) of
defendant, the lower court, in discussing this the said automobile.
question, said:
It does not positively appear of record that the
"Regardless of the question whether the plaintiff's automobile in question was not included in the
letter of April 20 (Exhibit B) was a sufficient other policies. It does appear that the automobile
compliance with the requirement that he furnish was saved and was considered as a part of the
notice of loss, the fact remains that on the salvage. It is alleged that the salvage amounted to
following day the insurers replied by a letter (Exhibit P4,000, including the automobile. This amount
C) declaring that the 'policies were null and void,' (P4,000) was distributed among the different
and in effect denying liability. It is well settled by a insurers and the amount of their responsibility was
preponderance of authorities that such a denial is a proportionately reduced. The defendant and
waiver of notice of loss, because if the 'policies are appellant in the present case made no objection at
null and void,' the furnishing of such notice would any time in the lower court to that distribution of
be vain and useless. (13 Am. & Eng. Encyc. of Law, the salvage. The claim is now made for the first
347, 348, 349.) Besides, 'immediate notice' is time. No reason is given why the objection was not
construed to mean only within a reasonable time. made at the time of the distribution of the salvage,
including the automobile, among all of the insurers.
"Much the same may be said as to the objection
The lower court had no opportunity to pass upon
that the insured failed to furnish to the insurers his
the question now presented for the first time. The
books and papers or to present a detailed
defendant stood by and allowed the other insurers
statement to the 'juez municipal,' in accordance
to share in the salvage, which he claims now wholly
with article 404 of the Code of Commerce. The last-
belonged to him. We think it is now too late to raise
named provision is similar to one appearing in
the question.
many American policies requiring a certificate from
a magistrate nearest the loss regarding the
For all of the foregoing reasons, we are of the
opinion that the judgment of the lower court should
be affirmed, and it is hereby ordered that judgment
be entered against the defendant and in favor of
the plaintiff for the sum of P9,841.50, with interest
at the rate of 6 per cent from the 13th of July, 1908,
with costs. So ordered.

Arellano, C.J., and Torres, J., concur.

Trent, J., concurs in the result.

Moreland, J., dissents.

|||  (Bachrach v. British American Assurance Co., G.R.

No. L-5715, [December 20, 1910], 17 PHIL 555-565)