Case Digest (G.R. No. 241126)
Facts:
In Malayan Insurance Company, Inc. v. PAP Co., Ltd., G.R. No. 200784, decided August 7, 2013 under the 1987 Constitution, Malayan Insurance (Malayan) issued on May 13, 1996 a one‐year Fire Insurance Policy No. F-00227-000073 covering PAP Co.’s machinery and equipment located at the Sanyo Precision Philippines Building, Rosario, Cavite, with mortgagee protection in favor of Rizal Commercial Banking Corporation (RCBC). Before expiration, Malayan renewed the policy “as is” from May 13, 1997 to May 13, 1998. In September 1996, PAP transferred the insured equipment to the Pace Pacific Building in Rosario without securing Malayan’s written endorsement, although PAP notified RCBC. On October 12, 1997, a fire destroyed the equipment, prompting PAP to claim indemnity. Malayan denied coverage, invoking Condition No. 9(c) forbidding removal of the insured property without the insurer’s sanction. PAP sued in the Regional Trial Court (RTC), which on September 17, 2009 ordered Malayan to pay ...Case Digest (G.R. No. 241126)
Facts:
- Policy Issuance and Renewal
- On May 13, 1996, Malayan Insurance Co., Inc. issued Fire Insurance Policy No. F-00227-000073 to PAP Co., Ltd., covering machineries and equipment located at Sanyo Precision Phils. Bldg., Phase III, Lot 4, Block 15, PEZA, Rosario, Cavite, in the amount of ₱15,000,000.00, naming Rizal Commercial Banking Corp. (RCBC) as mortgagee.
- Before expiration, PAP renewed the policy on an “as is” basis by Fire Insurance Policy No. F-00227-000079, effective May 13, 1997 to May 13, 1998, for the same amount and property description.
- Transfer of Property and Loss
- In September 1996, PAP transferred the insured machineries from the Sanyo Building to Pace Pacific Bldg., Lot 14, Block 14, Phase III, PEZA, Rosario, Cavite (Pace Pacific), without notifying Malayan.
- On October 12, 1997, during the subsistence of the renewal policy, those machineries were totally destroyed by fire at Pace Pacific. PAP filed a claim with Malayan, which was denied on December 15, 1997, for breach of the location warranty.
- Proceedings Below
- RTC, Branch 15, Manila (Sept. 17, 2009) ruled in favor of PAP, ordering Malayan to pay ₱15,000,000.00 with 12% interest from date of loss, ₱500,000.00 attorney’s fees, and costs of suit, holding that Malayan failed to prove increased risk.
- CA (Oct. 27, 2011) affirmed with modification: Malayan must indemnify ₱15,000,000.00 with 12% interest, deleted the attorney’s fees award, and held that PAP need not secure express consent to transfer and that no increased risk was shown.
- Petitioner’s Appeal
- Malayan filed a Rule 45 petition, arguing (a) breach of affirmative warranty and misrepresentation regarding location under Sections 31, 45, 74; (b) concealment under Section 27; (c) increased risk meriting rescission under Section 168; (d) improper award of 12% interest; (e) ignoring mortgagee clause; and (f) misapplication of adhesion doctrine.
Issues:
- Whether PAP’s transfer of the insured property without notifying or obtaining Malayan’s consent constitutes concealment, misrepresentation, and breach of material warranty, thus entitling Malayan to avoid liability.
- Whether the change of location increased the risk of loss, allowing rescission under Section 168 of the Insurance Code.
- Whether PAP is entitled to 12% per annum interest on the indemnity from the date of loss.
- Whether PAP, not being the mortgagee-named RCBC, may enforce rights under the policy.
- Whether ambiguities in the policy must be construed against Malayan as the drafter.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)