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    Pacific Banking Corporation v. Court of Appeals, G.R. No. L-41014, 28 November 1988

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    Roseller Sasis

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    Pacific Banking Corporation v. Court of Appeals, G.R. No. L-41014, 28 November 1988

    Uploaded by

    Roseller Sasis
    17 views2 pages

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    Pacific Banking Corporation v. Court of Appeals, G.R. No. L-41014, 28 November 1988

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    17 views2 pages

    Pacific Banking Corporation v. Court of Appeals, G.R. No. L-41014, 28 November 1988

    Uploaded by

    Roseller Sasis

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Pacific Banking Corporation v.

    Court of Appeals,
    G.R. No. L-41014, 28 November 1988

    FACTS:

    Paramount Shirt Manufacturing Co. (insured) was issued a Fire Policy by which
    respondent insurance corporation bound itself to indemnify the former for any loss
    or damage caused by fire to its property. The insured was, at the time of the
    issuance of the policy and is up to this time, a debtor of petitioner and the goods
    described in the policy were held in trust by the insured for the petitioner.
    Paramount endorsed the policy to Pacific as mortgagor/trustor with Oriental’s
    consent. The endorsement stated: “loss if any under this policy is payable to the
    Pacific Banking Corporation.” The goods insured were then totally destroyed by
    fire. Pacific demanded for indemnity from Oriental. a fire broke out on the subject
    premises destroying the goods contained in its ground and second floors. Pacific
    filed an action for sum of money against Oriental.

    During trial, it was found that Paramount (original insured) also failed to disclose
    other insurances taken over the same goods covered by the insurance with
    Oriental, allegedly in violation of Condition No. 3 (Other Insurance Clause)
    thereon.

    ISSUE:

    Whether or not the contract can be rescinded

    HELD

    It is not disputed that the insured failed to reveal before the loss three other
    insurances. As found by the Court of Appeals, by reason of said unrevealed
    insurances, the insured had been guilty of a false declaration; a clear
    misrepresentation and a vital one because where the insured had been asked to
    reveal but did not, that was deception. Otherwise stated, had the insurer known
    that there were many co-insurances, it could have hesitated or plainly desisted
    from entering into such contract. Hence, the insured was guilty of clear fraud.
    Petitioner points out that Condition No. 3 in the policy in relation to the "other
    insurance clause" supposedly to have been violated, cannot certainly defeat the
    right of the petitioner to recover the insurance as mortgagee/assignee. Particularly
    referring to the mortgage clause of the policy, petitioner argues that considering
    the purpose for which the endorsement or assignment was made, that is, to protect
    the mortgagee/assignee against any untoward act or omission of the insured, it
    would be absurd to hold that petitioner is barred from recovering the insurance on
    account of the alleged violation committed by the insured.
    Undoubtedly, it is but fair and just that where the insured who is primarily entitled
    to receive the proceeds of the policy has by its fraud and/or misrepresentation,
    forfeited said right, with more reason petitioner which is merely claiming as
    indorsee of said insured, cannot be entitled to such proceeds.

    KEY CONCEPT:

    Undoubtedly, it is but fair and just that where the insured who is primarily entitled
    to receive the proceeds of the policy has by its fraud and/or misrepresentation,
    forfeited said right, with more reason petitioner which is merely claiming as
    indorsee of said insured, cannot be entitled to such proceeds.

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