6. REGINA L. EDILLON vs.

MANILA BANKERS LIFE INSURANCE CORPORATION and the CFI QC

G.R. No. L-34200, September 30, 1982

FACTS:

Carmen O, Lapuz applied with Manila Bankers for insurance coverage against accident and injuries. She gave the
date of her birth as July 11, 1904. She paid the sum of P20.00 representing the premium for which she was issued
the corresponding receipt. The policy was to be effective for 90 days.

During the effectivity, Carmen O. Lapuz died in a vehicular accident in the North Diversion Road.
Petitioner Regina L. Edillon, a sister of the insured and the beneficiary in the policy, filed her claim for the proceeds
of the insurance. Her claim having been denied, Regina L. Edillon instituted this action in the trial court.

The insurance corporation relies on a provision contained in the contract excluding its liability to pay claims under
the policy in behalf of "persons who are under the age of sixteen (16) years of age or over the age of sixty (60)
years" They pointed out that the insured was over sixty (60) years of age when she applied for the insurance
coverage, hence the policy became void.

The trial court dismissed the complaint and ordered Edillon to pay P1000. The reason was that a policy of insurance
being a contract of adhesion, it was the duty of the insured to know the terms of the contract he or she is entering
into. The insured could not have been qualified under the conditions stated in said contract and should have asked
for a refund of the premium.

Issue:
Whether or not the acceptance by the insurance corporation of the premium and the issuance of the corresponding
certificate of insurance should be deemed a waiver of the exclusionary condition of coverage stated in the policy.

RULING: The age of the insured Carmen 0. Lapuz was not concealed to the insurance company. Despite such
information which could hardly be overlooked in the application form, considering its prominence thereon and its
materiality to the coverage applied for, the respondent insurance corporation received her payment of premium and
issued the corresponding certificate of insurance without question. The accident which resulted in the death of the
insured, a risk covered by the policy, occurred on May 31, 1969 or FORTY-FIVE (45) DAYS after the insurance
coverage was applied for. There was sufficient time for the private respondent to process the application and to
notice that the applicant was over 60 years of age and thereby cancel the policy on that ground if it was minded to
do so. Under the circumstances, the insurance corporation is already deemed in estoppel. It inaction to revoke the
policy despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such
condition.

It is usually held that where the insurer, at the time of the issuance of a policy of insurance, has knowledge of existing
facts which, if insisted on, would invalidate the contract from its very inception, such knowledge constitutes a waiver
of conditions in the contract inconsistent with the known facts, and the insurer is stopped thereafter from asserting
the breach of such conditions.

Reason: To allow a company to accept one's money for a policy of insurance which it then knows to be void and of
no effect, though it knows as it must, that the assured believes it to be valid and binding, is so contrary to the dictates
of honesty and fair dealing.

Capital Insurance & Surety Co., Inc. vs. - involved a violation of the provision of the policy requiring the payment of
premiums before the insurance shall become effective. The company issued the policy upon the execution of a
promissory note for the payment of the premium. A check given subsequent by the insured as partial payment of
the premium was dishonored for lack of funds. Despite such deviation from the terms of the policy, the insurer was
held liable.
7. THE INSULAR LIFE ASSURANCE CO. vs. SERAFIN D. FELICIANO ET AL (1941)
G.R. No. L-47593, December 29, 1941

FACTS: Evaristo Feliciano was issued 2 insurance policies (25T) by Insular Life upon solicitation of one its agents.
In September 1935, he died. His heirs (Serafin Feliciano et al) filed an insurance claim but Insular Life denied the
application as it averred that Feliciano’s application was attended by fraud. It was later found in court that the
insurance agent and the medical examiner of Insular Life who assisted Feliciano in signing the application knew that
Feliciano was already suffering from tuberculosis; that they were aware of the true medical condition of Feliciano yet
they still made it appear that he was healthy in the insurance application form; that Feliciano signed the application
in blank and the agent filled the information for him. The lower court rendered judgment in favor of the plaintiffs. The
lower court, after an exhaustive examination of the conflicting testimonies, also found that Feliciano was made to
sign the application and the examiner's report in blank, and that afterwards the blank spaces therein were filled in
by the agent and the medical examiner, who made it appear therein that Feliciano was a fit subject for insurance.
The lower court also held that neither the insured nor any member of his family concealed the real state of health of
the insured. That as a matter of fact the insured, as well as the members of his family, told the agent and the medical
examiner that the applicant had been sick and coughing for sometime and that he had also gone three times to the
Santol Sanatarium.
On appeal, this finding of facts of the lower court was sustained by the Court of Appeals. This concludes the
controversy over the facts in so far as this Court is concerned
ISSUE: Whether or not Insular Life can avoid the insurance policy by reason of the fact that its agent knowingly and
intentionally wrote down the answers in the application differing from those made by Feliciano hence instead of
serving the interests of his principal, acts in his own or another’s interest and adversely to that of his principal.
HELD: No. Insular Life must pay the insurance policy. In the present case, the agent knew all the time the true state
of health of the insured. The insurer's medical examiner approve the application knowing full well that the applicant
was sick. The situation is one in which one of two innocent parties must bear a loss for his reliance upon a third
person. In this case, it was the insurer who gave the agent authority to deal with the applicant. It was the one who
selected the agent, thus implying that the insured could put his trust on him. It was the one who drafted and accepted
the policy and consummated the contract. It seems reasonable that as between the two of them, the one who
employed and gave character to the third person as its agent should be the one to bear the loss.
The weight of authority is that if an agent of the insurer, after obtaining from an applicant for insurance a correct and
truthful answer to interrogatories contained in the application for insurance, without knowledge of the applicant fills
in false answers, either fraudulently or otherwise, the insurer cannot assert the falsity of such answers as a defense
to liability on the policy, and this is true generally without regard to the subject matter of the answers or the nature
of the agent’s duties or limitations on his authority, at least if not brought to the attention of the applicant.
The fact that the insured did not read the application which he signed, is not indicative of bad faith. It has been held
that it is not negligence for the insured to sign an application without first reading it if the insurer by its conduct in
appointing the agent influenced the insured to place trust and confidence in the agent.
"Nor can it be said that the assured, who has fully, frankly, truthfully, and in good faith answered all the required
questions, is guilty of negligence in signing, without reading, the application which is thereupon prepared by the
agent. He is justified in assuming that the agent has, with equal good faith, truthfully recorded the answers given
him. He may well say to the company: "You accredited this man to me as your representative and I signed the
application thus prepared by him, relying upon the character which you gave him when you commissioned him to
come to me as your agent. If he acted dishonestly in the matter, you and not I must suffer the consequences.' ..." In
the instant case, it has been proved that the insured could not read English, the language in which the application
was written, and that after the contract was signed, it was kept by his mother. As a consequence, the insured had
no opportunity to read or correct any misstatement therein.
8. THE INSULAR LIFE ASSURANCE CO. vs. SERAFIN D. FELICIANO ET AL (1943)
G.R. No. L-47593, December 29, 1943

FACTS: Evaristo Feliciano, who died on September 29, 1935, was suffering with advanced pulmonary tuberculosis
when he signed his applications for insurance with the petitioner on October 12, 1934. On that same date Doctor
Trepp, who had taken X-ray pictures of his lungs, informed the respondent Dr. Serafin D. Feliciano, brother of
Evaristo, that the latter "was already in a very serious ad practically hopeless condition." Nevertheless the question
contained in the application — "Have you ever suffered from any ailment or disease of the lungs, pleurisy, pneumonia
or asthma?" — appears to have been answered, "No" And above the signature of the applicant, following the
answers to the various questions propounded to him, is the following printed statement:

I declare on behalf of myself and of any person who shall have or claim any interest in any policy issued
hereunder, that each of the above answers is full, complete and true, and that to the best of my knowledge
and belief I am a proper subject for life insurance.

The false answer above referred to, as well as the others, was written by the Company's soliciting agent Romulo M.
David, in collusion with the medical examiner Dr. Gregorio Valdez, for the purpose of securing the Company's
approval of the application so that the policy to be issued thereon might be credited to said agent in connection with
the inter-provincial contest which the Company was then holding among its soliciting agents to boost the sales of its
policies. Agent David bribed Medical Examiner Valdez with money which the former borrowed from the applicant's
mother by way of advanced payment on the premium, according to the finding of the Court of Appeals. Said court
also found that before the insured signed the application he, as well as the members of his family, told the agent
and the medical examiner that he had been sick and coughing for some time and that he had gone three times to
the Santol Sanatorium and had X-ray pictures of his lungs taken; but that in spite of such information the agent and
the medical examiner told them that the applicant was a fit subject for insurance.

ISSUE: Whether or not the policies in question are null and void ab initio and that all that the respondents are entitled
to is the refund of the premiums paid thereon.

RULING: Yes. When Evaristo Feliciano, the applicant for insurance, signed the application in blank and authorized
the soliciting agent and/or medical examiner of the Company to write the answers for him, he made them his own
agents for that purpose, and he was responsible for their acts in that connection. If they falsified the answers for
him, he could not evade the responsibility for he falsification. He was not supposed to sign the application in blank.
He knew that the answers to the questions therein contained would be "the basis of the policy," and for that every
reason he was required with his signature to vouch for truth thereof.

By accepting the policy he became charged with knowledge of its contents, whether he actually read it or not. He
could not ostrich-like hide his head from it in order to avoid his part of the bargain and at the same time claim the
benefit thereof. He knew, or was chargeable with knowledge, from the very terms of the two policies sued upon (one
of which is printed in English and the other in Spanish) that the soliciting agent and the medical examiner had no
power to bind the Company by any verbal promise or oral representation. The insured, therefore, had no right to rely
— and we cannot believe he relied in good faith — upon the oral representation of said agent and medical examiner
that he (the applicant) was a fit subject for insurance notwithstanding that he had been and was still suffering with
advanced pulmonary tuberculosis.

From all the facts and circumstances of this case, we are constrained to conclude that the insured was a
coparticipant, and coresponsible with Agent David and Medical Examiner Valdez, in the fraudulent procurement of
the policies in question and that by reason thereof said policies are void ab initio.

Wheretofore, the motion for reconsideration is sustained and the judgment of the Court of Appeals is hereby
reversed. Let another judgment be entered in favor of the respondents and against the petitioner for the refund of
the premiums amounting to P1,389, with legal interest thereon from the date of the complaint, and without any finding
as to costs.
9. QUA CHEE GAN vs. LAW UNION AND ROCK INSURANCE CO., LTD., represented by its agent, WARNER,
BARNES AND CO., LTD.
G.R. No. L-4611, December 17, 1955

FACTS: Qua Chee Gan owns four warehouses in Albay. He was using these warehouses to house crops like copra
and hemp. All warehouses were insured by Law Union and Rock Insurance for the amount of P370,000.00. The
insurance states that Qua Chee Gan should install 11 hydrants in the warehouses’ premises. Qua Chee Gan
installed only two, but Law Union nevertheless went on with the insurance policy and collected premiums from Qua
Chee Gan. The insurance contract also provides that “oil” should not be stored within the premises of the
warehouses.
In 1940, three of the warehouses were destroyed by fire. The damage caused amounted to P398k. Qua Chee Gan
demanded insurance pay from Law Union but the latter refused as it alleged that after investigation from their part,
they found out that Qua Chee Gan caused the fire. Law Union in fact sued Qua Chee Gan for Arson.
Que Chee Gan, with his brother, Qua Chee Pao, and some employees of his, were indicted and tried in 1940 for the
crime of arson but was subsequently. He then demanded that Law Union pay up. This time, Law Union averred that
the insurance contract is void because Qua Chee Gan failed to install 11 hydrants; and that gasoline was found in
one of the warehouses.
ISSUES:
1. WON the insurance company can void the policies it had issued. NO
2. WON the insured violated the "Hemp Warranty" provisions of the policy against the storage of gasoline. NO.
3. WON the insured planned the destruction of the bodega. NO

RULING:
1. The appellant is barred by waiver (or rather estoppel) to claim violation of the so-called fire hydrants warranty, for
the reason that knowing fully all that the number of hydrants demanded therein never existed from the very
beginning, the appellant neverthless issued the policies in question subject to such warranty, and received the
corresponding premiums. The insurance company was aware, even before the policies were issued, that in the
premises insured there were only two fire hydrants installed by Qua Chee Gan and two others nearby, owned by
the municipality of Tabaco, contrary to the requirements of the warranty in question. Such fact appears from positive
testimony for the insured that appellant's agents inspected the premises; and the simple denials of appellant's
representative (Jamiczon) cannot overcome that proof.

The insurer, who at the time of issuance, has knowledge of existing facts which would invalidate the contract from
the beginning, such constitutes a waiver of conditions in the contract inconsistent with the facts, and the insurer is
stopped thereafter from asserting the breach of such conditions. Also, an insurance company intends to executed a
valid contract in return for the premium received; and when the policy contains a condition which renders it voidable
at its inception, and this result is known to the insurer, it will be presumed to have intended to waive the conditions
and to execute a binding contract, rather than to have deceived the insured into thinking he is insured when in fact
he is not.

The appellant is barred estoppel to claim violation of the so-called fire hydrants warranty, because it knew the
number of hydrants demanded therein never existed from the very beginning and issued the policies. To allow a
company to accept one's money for a policy of insurance which it then knows to be void and of no effect, though it
knows as it must, that the assured believes it to be valid and binding, is so contrary to the dictates of honesty and
fair dealing, and so closely related to positive fraud, as to the abhorrent to fair-minded men.

The appellant company so worded the policies that while exacting the greater number of fire hydrants and
appliances, it kept the premium discount at the minimum of 2 1/2%, thereby giving the insurance company a double
benefit. Such abnormal treatment of the insured strongly points at an abuse of the insurance company's selection
of the words and terms of the contract, over which it had absolute control.
Receipt of Premiums or Assessments after Cause for Forfeiture Other than Nonpayment. — It is a well settled rule
of law that an insurer which with knowledge of facts entitling it to treat a policy as no longer in force, receives and
accepts a premium on the policy, estopped to take advantage of the forfeiture. It cannot treat the policy as void for
the purpose of defense to an action to recover for a loss thereafter occurring and at the same time treat it as valid
for the purpose of earning and collecting further premiums.

2. Gasoline is not one of those items specifically prohibited from the premises of the warehouses. What was
mentioned was the word “oil” which could mean anything (from palm oil to lubricant and not gasoline or kerosene).
This ambiguity is to be interpreted against Law Union because a contract of insurance is a contract of adhesion.
Further, oil is incidental to Qua Chee Gan’s business, it being used for motor fuel

The ambiguity must be held strictly against the insurer and liberally in favor of the insured, especially to avoid a
forfeiture. So long as insurance companies insist upon the use of ambiguous, intricate and technical provisions,
which conceal rather than frankly disclose, their own intentions, the courts must, in fairness to those who purchase
insurance, construe every ambiguity in favor of the insured. Appellee admitted that there were 36 cans of gasoline
in the building designed. However, gasoline is not specifically mentioned among the prohibited articles listed in the
so-called "hemp warranty." The cause relied upon by the insurer speaks of "oils", and is uncertain because, "Oils"
usually mean "lubricants" and not gasoline or kerosene.

If the company intended to rely upon a condition of that character, it ought to have been plainly expressed in the
policy. The contract of insurance is one of perfect good faith not for the insured alone, but equally so for the insurer;
in fact, it is mere so for the latter, since its dominant bargaining position carries with it stricter responsibility.

Also, the gasoline kept in Bodega No. 2 was only incidental to his business, being no more than a customary 2 day's
supply for the five or six motor vehicles used for transporting of the stored merchandise. "It is well settled that the
keeping of inflammable oils on the premises though prohibited by the policy does not void it if such keeping is
incidental to the business."

3. It was unlikely that Qua burned the warehouse to defraud the company because he had the resources to pay off
the National Bank in a short time. Also, no motive appears for attempt to defraud the insurer. While the acquittal of
the insured in the arson case is not res judicata on the present civil action, the insurer's evidence, to judge from the
decision in the criminal case, is practically identical in both cases and must lead to the same result, since the proof
to establish the defense of connivance at the fire in order to defraud the insurer "cannot be materially less convincing
than that required in order to convict the insured of the crime of arson."

As to the defense that the burned bodegas could not possibly have contained the quantities of copra and hemp
stated in the fire claims, the insurer relied on its adjuster investigator who examined the premises during and after
the fire. His testimony, however, was based on inferences from the photographs and traces found after the fire, and
must yield to the contradictory testimony of those who actually saw the contents of the bodegas shortly before the
fire, while inspecting them for the mortgagee Bank.
10. E. M. BACHRACH vs.BRITISH AMERICAN ASSURANCE COMPANY
G.R. No. L-5715 December 20, 1910

FACTS:

1. July 13, 1908, the plaintiff commenced an action against the defendant to recover the sum of P9,841.50,
the amount due, deducting the salvage, upon the fire insurance policy was issued by the defendant.
2. E. M. Bachrach insured goods belonging to a general furniture store, such as iron and brass bedsteads,
toilet tables, chairs, ice boxes, bureaus, washstands, mirrors, and sea-grass furniture stored in the ground
floor and first story of house and dwelling, with an authorized agent of the British American Assurance
Company, for the amount of 10K.

The company hereby agrees with the insured (but subject to the conditions on the back hereof, which are
to be taken as a part of this policy) that if the property above described, or any part thereof, shall be
destroyed or damaged by fire, at any time between the 21st day of February, 1908, and 4 o'clock in the
afternoon of the 21st day of February, 1909

3. The policy also covered a "Calalac" automobile to the extent of P1,250.

4. British American Assurance Company denied the liability, alleging that:
o First. That the plaintiff maintained a paint and varnish shop in the said building where the goods
which were insured were stored.
o Second. That the plaintiff transferred his interest in and to the property covered by the policy to H.
W. Peabody & Co. to secure certain indebtedness due and owing to said company, and also that
the plaintiff had transferred his interest in certain of the goods covered by the said policy to one
Macke, to secure certain obligations assumed by the said Macke for and on behalf of the insured.
 That the sanction (approval) of the said defendant had not been obtained by the plaintiff,
as required by the said policy.
o Third. That the plaintiff, on the 18th of April, 1908, and immediately preceding the outbreak of the
alleged fire, wilfully placed a gasoline can containing 10 gallons of gasoline in the upper story of
said building in close proximity to a portion of said goods, wares, and merchandise, which can was
so placed by the plaintiff as to permit the gasoline to run on the floor of said second story, and after
so placing said gasoline, he, the plaintiff, placed in close proximity to said escaping gasoline a
lighted lamp containing alcohol, thereby greatly increasing the risk of fire.
o Fourth. That the plaintiff made no proof of the loss within the time required by condition five of said
policy, nor did the insured file a statement with the municipal or any other judge or court of the
goods alleged to have been in said building at the time of the alleged fire, nor of the goods saved,
nor the loss suffered.
5. The plaintiff, after denying nearly all of the facts set out in the special answer of the defendant, alleged:
o First. That he had been acquitted in a criminal action against him, after a trial duly and regularly
had, upon a charge of arson, based upon the same alleged facts set out in the answer of the
defendant.
o Second. That he had made no proof of the loss set up in his complaint for the reason that
immediately after he had, on the 20th of April, 1908, given the defendant due notice in writing of
said loss, the defendant, on the 21st of April, 1908, and thereafter on other occasions, had waived
all right to require proof of said loss by denying all liability under the policy and by declaring said
policy to be null and void.
6. The lower court found that the defendant was liable to the plaintiff and rendered a judgment against the
defendant for the sum of P9,841.50, with interest for a period of one year at 6 per cent, making a total of
P10,431.99, with costs.
ISSUE:

Can Bachrach claim against the insurance company?

HELD: YES. The lower court’s decision is affirmed

1. The property insured consisted mainly of household furniture kept for the purpose of sale. The preservation
of the furniture in a salable condition by retouching or otherwise was incidental to the business. The
evidence offered by the plaintiff is to the effect that alcohol was used in preparing varnish for the purpose
of retouching, though he also says that the alcohol was kept in store and not in the bodega where the
furniture was.
The keeping of inflammable oils on the premises, though prohibited by the policy, does not void it if such
keeping is incidental to the business (furniture store kasi kaya kailangan ang paints, varnish and other oils).

It may be added that there was no provision in the policy prohibiting the keeping of paints and varnishes
upon the premises where the insured property was stored.
o If the company intended to rely upon a condition of that character, it ought to have been plainly
expressed in the policy.

2. It is claimed that the execution of a chattel mortgage on the insured property by BACHRACH to H. W.
Peabody & Co. without permission of the insurance company violated what is known as the “alienation
clause” -> forfeiture if the interest in the property pass from the insured to another person.
o There is no provision in said policy prohibiting the plaintiff from placing a mortgage upon the
property insured.
o The interest in property insured does not pass by the mere execution of a chattel mortgage and
that while a chattel mortgage is a conditional sale, there is no alienation within the meaning of the
insurance law until the mortgage acquires a right to take possession by default under the terms of
the mortgage.
o No such right is claimed to have accrued in the case at bar, and the alienation clause is therefore
inapplicable.

3. We cannot find that there is a preponderance of evidence showing that the plaintiff did actually set fire or
cause fire to be set to the goods in question.
o Plaintiff was acquitted of the crime of arson.

4. Regardless of the question whether the plaintiff's letter of April 20 (Exhibit B) was a sufficient compliance
with the requirement that he furnish notice of loss, the fact remains that on the following day the insurers
replied by a letter (Exhibit C) declaring that the "policies were null and void," and in effect denying liability.

It is well settled by a preponderance of authorities that such a denial is a waiver of notice of loss, because
if the "policies are null and void," the furnishing of such notice would be vain and useless. Besides,
"immediate notice" is construed to mean only within a reasonable time.

5. It does not positively appear of record that the automobile in question was not included in the other policies.
o It does appear that the automobile was saved and was considered as a part of the salvaged.
o It is alleged that the salvage amounted to P4,000, including the automobile.
o This amount (P4,000) was distributed among the different insurers and the amount of their
responsibility was proportionately reduced.
o The defendant and appellant in the present case made no objection at any time in the lower court
to that distribution of the salvage.
o The claim is now made for the first time.
11. AMERICAN HOME ASSURANCE COMPANY vs. TANTUCO ENTERPRISES, INC
G.R. No. 138941. October 8, 2001

FACTS: Tantuco Enterprises, Inc. is a coconut oil milling and refining company. It owned two mills (the first oil mill
and a new one), both located at its factory compound at Iyam, Lucena City. The two oil mills were separately covered
by fire insurance policies issued by petitioner American Home Assurance Co., Philippine Branch. The first oil mill
was insured for three million pesos (P3,000,000.00) for the period March 1, 1991 to 1992. The new oil mill was
insured for six million pesos (P6,000,000.00) for the same term.

On Sept. 30, 1991, a fire broke out and gutted and consumed the new oil mill. American Home rejected the claim
for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill It stated that
the description of the insured establishment referred to another building thus: the policy nos. 306-7432321-9 (Ps
6M) and 306-7432324-4 (Ps 3M) extend insurance coverage to your oil mill under Building No. 5, whilst the
affected oil mill was under Building No. 14.

A complaint for specific performance and damages was consequently instituted by the respondent with the RTC,
Branch 53 of Lucena City. On October 16, 1995, after trial, the lower court rendered a Decision finding the
petitioner liable on the insurance policy. CA upheld

Petitioner contents that the oil mill gutted by fire was not the one described by the specific boundaries in the
contested policy.

ISSUE:
1. Whether or not the burned oil mill is covered by the fire insurance policy. Yes.
2. Whether the respondent violated the Fire Extinguishing Appliances Warranty. No.

RULING:

In construing the words used descriptive of a building insured, the greatest liberality is shown by the courts in
giving effect to the insurance. In view of the custom of insurance agents to examine buildings before writing
policies upon them, and since a mistake as to the identity and character of the building is extremely unlikely, the
courts are inclined to consider the policy of insurance covers any building which the parties manifestly intended to
insure, however inaccurate the description may be.

Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to our mind, that what the parties
manifestly intended to insure was the new oil mill.

If the parties really intended to protect the first oil mill, then there is no need to specify it as new. Indeed, it would
be absurd to assume that the respondent would protect its first oil mill for different amounts and leave uncovered
its second one.

The imperfection in the description of the insured oil mills boundaries can be attributed to a misunderstanding
between the petitioners general agent, Mr. Alfredo Borja, and its policy issuing clerk, who made the error of copying
the boundaries of the first oil mill when typing the policy to be issued for the new on

2. The said warranty provides:

WARRANTED that during the currency of this Policy, Fire Extinguishing Appliances as mentioned below
shall be maintained in efficient working order on the premises to which insurance applies:
- portable extinguishers, internal hydrants, external hydrants, fire pump, 24-hour security services

-BREACH of this warranty shall render this policy null and void and the Company shall no longer be liable for any
loss
The aforementioned warranty did not require respondent to provide for all the fire extinguishing appliances
enumerated therein. Additionally, we find that neither did it require that the appliances are restricted to those
mentioned in the warranty. In other words, what the warranty mandates is that respondent should maintain in efficient
working condition within the premises of the insured property, fire fighting equipments such as, but not limited to,
those identified in the list, which will serve as the oil mills first line of defense in case any part of it bursts into flame.

To be sure, respondent was able to comply with the warranty. Within the vicinity of the new oil mill can be found
the following devices: numerous portable fire extinguishers, two fire hoses,[21] fire hydrant,[22] and an emergency
fire engine.[23] All of these equipments were in efficient working order when the fire occurred.
14. K. S. YOUNG vs. THE MIDLAND TEXTILE INSURANCE COMPANY
G.R. No. L-9370, March 31, 1915

FACTS:

The purpose of the present action is to recover the sum of P3,000 upon an insurance policy. The lower
court rendered a judgment in favor of the plaintiff and against the defendant for the sum of P2,708.78, and costs..
The plaintiff conducted a candy and fruit store on the Escolta, in the city of Manila, and occupied a
building at 321 Calle Claveria, as a residence and bodega (storehouse). On the 29th of May, 1912, the defendant,
in consideration of the payment of a premium of P60, entered into a contract of insurance with the plaintiff
promising to pay to the plaintiff the sum of P3,000, in case said residence and bodega and contents should be
destroyed by fire. One of the conditions of said contract was that no hazardous goods be stored or kept in the
building.
“Warranty B" and is as follows: "Waranty B. — It is hereby declared and agreed that during the pendency
of this policy no hazardous goods stored or kept for sale, and no hazardous trade or process be carried on, in the
building to which this insurance applies, or in any building connected therewith."
On the 4th or 5th of February, 1913, the plaintiff placed in said residence and bodega three boxes which
belonged to him and which were filled with fireworks for the celebration of the Chinese new year.
On the 18th day of March, 1913, said residence and bodega and the contents thereof were partially
destroyed. Fireworks were found in a part of the building not destroyed by the fire; that they in no way contributed
to the fire, or to the loss occasioned thereby.

Issue:
Whether or not the placing of said fireworks in the building insured, under the conditions above
enumerated, they being "hazardous goods," is a violation of the terms of the contract of insurance. Yes.

Held:
The word "stored" has been defined to be a deposit in a store or warehouse for preservation or safe
keeping; to put away for future use, especially for future consumption; to place in a warehouse or other place of
deposit for safe keeping. Said definition does not include a deposit in a store, in small quantities, for daily use.
"Daily use" precludes the idea of deposit for preservation or safe keeping, as well as a deposit for future
consumption or safe keeping.
In the present case no claim is made that the "hazardous goods" were placed in the bodega for present or
daily use. It is admitted that they were placed in the bodega "for future use," or for future consumption, or for safe
keeping. It seems clear to us that the "hazardous goods" in question were "stored" in the bodega, as that word is
generally defined.

The terms of the policy constitute the measure of the insurer's liability, and in order to recover the insured must show
himself within those terms; and if it appears that the contract has been terminated by a violation, on the part of the
insured, of its conditions, then there can be no right of recovery. The compliance of the insured with the terms of the
contract is a condition precedent to the right of recovery. If the insured has violated or failed to perform the conditions
of the contract, and such a violation or want of performance has not been waived by the insurer, then the insured
cannot recover. Courts are not permitted to make contracts for the parties.

The violation of the terms of the contract, by virtue of the provisions of the policy itself, terminated, at the election of
either party, he contractual relations. The right to terminate the contractual relations exists even though the violation
was not the direct cause of the loss. In the present case, the deposit of the "hazardous goods," in the building
insured, was a violation of the terms of the contract. Although the hazardous goods did not contribute to the loss,
the insurer, at his election, was relieved from liability. Said deposit created a new risk, not included in the terms of
the contract. The insurer had neither been paid, nor had he entered into a contract, to cover the increased risk.