Case Digest (G.R. No. L-27932)
Facts:
Union Manufacturing Co., Inc. and Republic Bank v. Philippine Guaranty Co., Inc., G.R. No. L‑27932, October 30, 1972, the Supreme Court En Banc, Fernando, J., writing for the Court.The dispute arose from loans extended by Republic Bank to Union Manufacturing Co., Inc. on January 12, 1962 totaling P415,000, secured by real and chattel mortgages. As an additional condition of the mortgage, Union Manufacturing undertook to insure the mortgaged properties for the aggregate amount of the indebtedness. When the mortgagor failed to obtain the required insurance, Republic Bank procured an insurance cover and, through a cover note dated September 25, 1962, obtained a fire insurance policy (Policy No. 43170, sum insured P500,000) from Philippine Guaranty Co., Inc. The premiums for the initial policy and its renewal (issued September 27, 1962 and renewed September 26, 1963) were paid by Republic Bank but charged to Union Manufacturing’s account.
A fire occurred on September 6, 1964. Union Manufacturing filed a claim with Philippine Guaranty on October 6, 1964; the insurer denied liability by letter dated November 27, 1964, asserting breach of policy conditions including non‑disclosure of other insurance and failure to produce required proofs. At the time Philippine Guaranty’s policy was issued, the mortgaged properties were already partly covered by other policies (Sincere; Oceanic/related policies). While Philippine Guaranty’s policy was in effect, Union Manufacturing obtained additional insurance policies (New India, Sincere renewal, Manila Insurance) without the insurer’s consent or endorsement. The cover note and policy contained a warranty effectively declaring no co‑insurance.
At the trial court, the insurer successfully avoided liability on the ground that the insured violated the policy warranty and other conditions; consequently the trial court held both Union Manufacturing and Republic B...(Subscriber-Only)
Issues:
- May the insurer lawfully avoid liability by proving that the assured violated a warranty requiring disclosure of other insurance?
- Can Republic Bank, as payee/mortgagee named in the cover note and entitled to payment “as its interest may appear subject to the terms and conditions…”, recover under the policy despite the as...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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