G.

Warranties the contract, or impossible, the omission to fulfill the

Warranty - A statement or promise set forth in the policy
itself or incorporated in it by proper reference, the untruth
or non-fulfillment of w/c in any respect and w/o reference to
whether the insurer was in fact prejudiced by such untruth
or non-fulfillment, renders the policy voidable by the
insurer.
Different kinds of warranty:
1.) Affirmative (Sec. 68);
2.) Promissory (Sec. 72);
3.) Express (Sec. 67); or
4.) Implied (Sec. 67).
Express warranty – An agreement contained in the policy
or clearly incorporated therein as part thereof whereby the
insured stipulates that certain facts relating to the risk are
or shall be true or certain acts relating to the same subjects
have been or shall be done.
Implied warranty – Warranty w/c from the very nature of the
contract or from the general tenor of the words, altho’ no
express warranty is mentioned, is necessarily embodied in
the policy as part thereof and w/c binds the insured as tho’
expressed in the contract.
warranty does not avoid the policy.
Section 74 of Insurance Code
The violation of a material warranty, or other material
provision of a policy, on the part of either party thereto,
entitles the other to rescind.
Section 75 of Insurance Code
A policy may declare that a violation of specified provisions
thereof shall avoid it, otherwise the breach of an immaterial
provision does not avoid the policy.
Section 76 of Insurance Code
A breach of warranty without fraud merely exonerates an
insurer from the time that it occurs, or where it is broken in
its inception, prevents the policy from attaching to the risk.
Performance become impossible, it is in an exception.
Falsity and not fraud is the basis to void a contract of
insurance under warranty.
Note: May impose conditions; it must be happen before the
contract become is binding.

Affirmative warranty – One w/c asserts the existence of a

fact or condition at the time it is made.
Promissory warranty: One where the insured stipulates that
certain facts or conditions pertaining to the risk shall exist
or that certain things w/ reference thereto shall be done or

Promissory warranty – commitment

Section 67 of Insurance Code

A warranty is either expressed or implied.

Section 68 of Insurance Code

A warranty may relate to the past, the present, the future,
or to any or all of these.

Section 69 of Insurance Code

No particular form of words is necessary to create a
warranty.

Section 70 of Insurance Code

Without prejudice to section fifty-one, every express
warranty, made at or before the execution of a policy, must
be contained in the policy itself, or in another instrument
signed by the insured and referred to in the policy as
making a part of it.

Section 71 of Insurance Code

A statement in a policy of matter relating to the person or
thing insured, or to the risk, as a fact, is an express
warranty thereof

Section 72 of Insurance Code

A statement in a policy which imparts that it is intended to
do or not to do a thing which materially affects the risk, is a
warranty that such act or omission shall take place.

Section 73 of Insurance Code

When, before the time arrives for the performance of a
warranty relating to the future, a loss insured against
happens, or performance becomes unlawful at the place of
STA. ANA V COMMERCIAL UNION LNSURANCE (1930)
Doctrine:
Without deciding whether notice of other
insurance upon the same property must be given in writing,
or whether a verbal notice is sufficient to render an
insurance valid which requires such notice, whether oral or
written, in the absolute absence of such notice when it is
one of the conditions specified in the fire insurance policy,
the policy is null and void.
Facts:
In 1923, Ulpiano Sta. Ana built a house of strong
materials with a galvanized iron roof in the municipality of
Pasig. On the October 1, 1925, the plaintiff Santa Ana took
out a P3K fire insurance policy on the house in the Phoenix
Assurance Company, and P6K policy in the Guardian
Assurance Company, Limited, for a period of one year from
that date until 4 o'clock in the afternoon of October 1, 1926,
paying the respective premiums of P97.50 and P196 to
said companies through their duly authorized Philippine
agent, Kerr & Company.
On November 19, 1925, the plaintiff Santa Ana
mortgaged said house to the plaintiff Rafael Garcia for
P5,000, for a period of two years, the contract being drawn
up as a retro sale for the sum of P5,000, and the policies
issued by the Phoenix Assurance Company and the
Guardian Assurance Company, Limited, were endorsed to
the mortgagee, Rafael Garcia.
On December 16, 1925, the plaintiff Santa Ana
reinsured said house with the defendant companies, the
Globe and Rutgers Fire Insurance Company of New York,
and the Commercial Union Assurance Company, Limited
of London, through their common agent duly authorized to
represent them in the Philippine Islands, the Pacific
Commercial Company, for the amount of P3,000 each,
paying the 90-peso premium due upon each policy, which
was to be effective for one year from the aforementioned
date until 4 o'clock in the afternoon of December 16, 1926.
On September 20, 1926, Santa Ana took out
another insurance policy on the house in question for
P6,000 in the "Filipinas, Compania de Seguros, which
issued the one-year policy, upon receiving from said
plaintiff the amount of P195 as premium thereon.
About 3 o'clock in the morning of October 1, 1926,
that is, twelve hours before the expiration of the policies
issued by the Phoenix Assurance Company and the
Guardian Assurance Company, Limited for P3,000 and
P6,000 respectively, a fire broke out in the insured house,
where Santa Ana and his family lived, starting in the ceiling
of the living room where the plaintiff and his family were at
that time sleeping, consuming the dwelling and every
combustible object within, including jewelry and clothing.
Santa Ana gave notice in due time of the loss to each and
every one of the companies in which he had insured the
house and demanded payment of the respective policies;
the assurance companies refused payment on the ground
that the claim of P21,000 filed by him was fraudulent, being
in excess of the real value of the insured property; that none
of said companies had been informed of the existence of
the other policies in the other companies, and that the fire
was intentional. Ulpiano Santa Ana therefore brought the
actions which gave rise to these cases.
Issue:
Whether or not the insurance companies are
liable for the claims?
Held:
No, the insurance companies are not liable for the
claims.
Ratio:
It appears that one of the conditions in the fire
insurance policies was that “no other insurance should be
admitted upon the property thereby assured without the
consent of said companies duly given by endorsement.”
The insured, Ulpiano Sta. Ana, has not stated in the last
two policies that his property had previously been insured
with the Phoenix and the Guardian Assurance Company,
and still less in the insurance policy of the "Compania
Filipinas" taken out on September 20 of the following year,
1926, nor has he obtained upon the first two policies the
necessary endorsements for the three subsequent
insurance policies. It should be noted that clause three of
the "Filipinas" policy drawn up in Spanish, and the english
policies issued by the four other companies, provided that
any outstanding insurance upon the whole or a portion of
the objects thereby assured must be declared by the
insured in writing and he must cause the company to add
or insert it in the policy, without which such policy shall be
null and avoid, and the insured will not be entitled to
indemnity in case of loss.
Santa Ana maintains that he gave the required
notice to all the insurance companies; To Kerr & Company
through their sub-agent, Mariano Morelos; to the Pacific
Commercial Company through their employee, Guillermo
de Leon; and to the "Filipinas, Compania de Seguros"
through their agent, Juan Grey; telling them he had paid for
other insurance on the same property. But he has been
contradicted in this by all the persons mentioned, and this
deprives his allegations of probative force, especially
considering that such advises or notices, so basic and
essential to the existence and validity of the policies, must
be given in writing as required in the noted attached to the
four policies above mentioned, and must be given in writing
as required in the note attached to the four policies above
mentioned, and must be endorsed upon each of them, so
that in case of necessity, as in the instant one, when a loss
occurs, the insured may clearly show that he has fulfilled
this indispensable requisite, since all companies, to which
people apply for insurance upon property already assured,
have an interest in knowing what other policies issued by
other companies the insured already holds, for the purpose
of knowing just what interest the applicant has in the
preservation of the property, and the care and precaution
to be taken for the prevention of loss.
Without deciding whether notice of other
insurance upon the same property must be given in writing,
or whether a verbal notice is sufficient to render an
insurance valid which requires such notice, whether oral or
written, in the absolute absence of such notice when it is
one of the conditions specified in the fire insurance policy,
the policy is null and void.
Dispositive:
Defendant insurance companies won.
ANG GIOK CHIP V. SPRINGFIELD FIRE AND MARINE
INSURANCE COMPANY –
Doctrine:
Section 65 of the Insurance Act and its
counterpart, section 265 of the Civil Code of California, will
bear analysis as tested by reason and authority. The law
says that every express warranty must be "contained in the
policy itself." The word "contained," according to the
dictionaries, means "included," inclosed," "embraced,"
"comprehended," etc. When, therefore, the courts speak of
a rider attached to the policy, and thus "embodied" therein,
or of a warranty "incorporated" in the policy, it is believed
that the phrase "contained in the policy itself" must
necessarily include such rider and warranty. As to the
alternative relating to "another instrument," "instrument" as
here used could not mean a mere slip of paper like a rider,
but something akin to the policy itself, which in section 48
of the Insurance Act is defined as "The written instrument,
in which a contract of insurance is set forth." In California,
every paper writing is not necessarily an "instrument" within
the statutory meaning of the term. The word "instrument
has a well-defined definition in California, and as used in
the Codes invariably means some written paper or
instrument signed and delivered by one person to another,
transferring the title to, or giving a lien, on property, or
giving a right to debt or duty. (Hoag vs. Howard [1880], 55
Cal., 564; People vs. Fraser[1913], 137 Pac., 276.) In other
words, the rider, warranty F, is contained in the policy itself,
because by the contract of insurance agreed to by the
parties it is made to form a part of the same, but is not
another instrument signed by the insured and referred to in
the policy as forming a part of it.
Again, referring to the jurisprudence of California,
another rule of insurance adopted in that State is in point.
It is admitted that the policy before us was accepted by the
plaintiff. The receipt of this policy by the insured without
objection binds both the acceptor and the insured to the
terms thereof. The insured may not thereafter be heard to
say that he did not read the policy or know its terms, since
it is his duty to read his policy and it will be assumed that
he did so. In California Jurisprudence, vol. 14, p. 427, from
which these statements are taken with citations to
California decisions, it is added that it has been held that
where the holder of a policy discovers a mistake made by
himself and the local agent in attaching the wrong rider to
his application, elects to retain the policy issued to him, and
neither requests the issuance of a different one nor offers
to pay the premium requisite to insure against the risk
which he believe the rider to cover, he thereby accepts the
policy.
Facts:
Ang Giok Chip doing business under the name
and style of Hua Bee Kong Si was formerly the owner of a
warehouse situated at No. 643 Calle Reina Regente, City
of Manila. The contents of the warehouse were insured with
the three insurance companies for the total sum of
P60,000. One insurance policy, in the amount of P10,000,
was taken out with the Springfield Fire & Marine Insurance
Company. The warehouse was destroyed by fire on
January 11, 1928, while the policy issued by the latter
company was in force.
Predicated on this policy the plaintiff instituted
action in the Court of First Instance of Manila against the
defendant to recover a proportional part of the loss coming
to P8,170.59. Four special defenses were interposed on
behalf of the insurance company, one being planted on a
violation of warranty F fixing the amount of hazardous
goods which might be stored in the insured building. The
trial judge in his decision found against the insurance
company on all points, and gave judgment in favor of the
plaintiff for the sum of P8,188.74. From this judgment the
insurance company has appealed, and it is to the first and
fourth errors assigned that we would address particular
attention.
Issue:
Whether or not the warranty referred to in the
policy as forming part of the contract of insurance and in
the form of a rider to the insurance policy, is null and void
because not complying with the Philippine Insurance Act?
Held:
No, the warranty referred to in the policy as
forming part of the contract of insurance and in the form of
a rider to the insurance policy, is not null and void because
not complying with the Philippine Insurance Act.
Ratio:
We are given to understand, and there is no
indication to the contrary, that we have here a standard
insurance policy. We are further given to understand, and
there is no indication to the contrary, that the issuance of
the policy in this case with its attached rider conforms to
well establish practice in the Philippines and elsewhere.
We are further given to understand, and there is no
indication to the contrary, that there are no less than sixty-
nine insurance companies doing business in the Philippine
Islands with outstanding policies more or less similar to the
one involved in this case, and that to nullify such policies
would place an unnecessary hindrance in the transaction
of insurance business in the Philippines. These are matters
of public policy. We cannot believe that it was ever the
legislative intention to insert in the Philippine Law on
Insurance an oddity, an incongruity, entirely out of harmony
with the law as found in other jurisdiction, and destructive
of good business practice.
We have studied this case carefully and having done so
have reached the definite conclusion that warranty F, a
rider attached to the face of the insurance policy, and
referred to in contract of insurance, is valid and sufficient
under section 65 of the Insurance Act. Accordingly,
sustaining the first and fourth errors assigned, and it being
unnecessary to discuss the remaining errors, the result will
be to reverse the judgment appealed from and to order the
dismissal of the complaint, without special pronouncement
as to costs in either instance.
Dispositive:
The judgment appealed from is reversed. The
warranty set forth in the policy is deemed valid.
YOUNG V. MIDLAND TEXTILE (1915)
Doctrine:
If the insured cannot bring himself within the
conditions of the policy, he is not entitled to recover for the
loss. 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.
Facts:
Plaintiff conducted a candy and fruit store in the
city of Manila, and occupied a building as a residence and
bodega. Subsequently, defendant, entered into a contract
of insurance with the plaintiff by the terms of which the
defendant company, upon certain conditions, promised to
pay to the plaintiff the sum of P3,000, in case said
residence and bodega and contends should be destroyed
by fire.
On the conditions of said
contract of insurance is found "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."
Plaintiff placed in said residence and bodega
three boxes, which belonged to him and which were filled
with fireworks. Some time later, said residence and bodega
and the contents thereof were partially destroyed by fire.
Said fireworks had been given to the plaintiff by
the former owner of the Luneta Candy Store; that the
plaintiff intended to use the same in the celebration of the
Chinese new year; that the authorities of the city of Manila
had prohibited the use of fireworks on said occasion, and
that the plaintiff then placed the same in said bodega. Both
of the parties agree that said fireworks come within the
phrase "hazardous goods," mentioned in said "warranty B"
of the policy and that the 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 and especially of "warranty B."
Held:
Yes, 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 and especially of "warranty B."
Ratio:
"Warranty B" provides that "no hazardous goods
be stored" in the building insured. It is admitted by both
parties that the fireworks are "hazardous goods." The
defendant alleged that they were "stored." The plaintiff
contends that under all the facts and circumstances of the
case, they were not "stored" in said building, and that the
placing of them in the building was not a violation of the
terms of the contract. Both the plaintiff and defendant agree
that if they were "hazardous goods," and if they were
"stored," then the act of the plaintiff was a violation of the
terms of the contract of insurance and the defendant was
justified in repudiating its liability thereunder.
The case calls for an interpretation of the term
"stored" as used in said "warranty B." While the word
"stored" has been variously defined by authors, as well as
by courts, We have found no case exactly analogous to the
present. The plaintiff says that he placed said fireworks in
the bodega after he had been notified that he could not use
them on the Chinese new year, in order that he might later
send them to a friend in the provinces. Whether a particular
article is "stored" or not must, in some degree, depend
upon the intention of the parties.
The author of the Century Dictionary defines the world
"store" to be a deposit in a store or warehouse for
preservation or safe keeping; or place in a warehouse or
other place of deposit for safe keeping. See also the
definitions given by the Standard Dictionary, to the same
effect.
Said definitions, of course, do not include a
deposit in a store, in small quantities, for daily use. "Daily
use" precludes the idea of a 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
safekeeping. The plaintiff makes no claim that he deposited
them there with any other idea than "for future use" — for
future consumption. It seems clear to us that the
"hazardous goods" in question were "stored" in the bodega,
as that word is generally defined.
If the insured cannot bring himself within the
conditions of the policy, he is not entitled to recover for the
loss. 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.
The plaintiff paid a premium based upon the risk
at the time the policy was issued. Certainly it cannot be
denied that the placing of the firecrackers in the building
insured increased the risk. The plaintiff had not paid a
premium based upon the increased risk, neither had the
defendant issued a policy upon the theory of a different risk.
Dispositive:
The “hazardous goods” were stored and thus a violation
of the terms of the policy. Defendant won.
AMERICAN HOME ASSURANCE VS TANTUCO will serve as the oil mill's first line of defense in case any
ENTERPRISE part of it bursts into flame.
It ought to be remembered that not only are
Doctrine: warranties strictly construed against the insurer, but they
Warranties strictly construed against the insurer, should, likewise, by themselves be reasonably interpreted.
but they should, likewise, by themselves be reasonably That reasonableness is to be ascertained in light of the
interpreted. That reasonableness is to be ascertained in factual conditions prevailing in each case. Here, we find
light of the factual conditions prevailing in each case that there is no more need for an internal hydrant
considering that inside the burned building were: (1)
Facts: numerous portable fire extinguishers, (2) an emergency fire
Respondent Tantuco Enterprises, Inc. is engaged engine, and (3) a fire hose which has a connection to one
in the coconut oil milling and refining industry. It owns two of the external hydrants.
oil mills, which were separately covered by fire insurance
policies, issued by petitioner American Home Assurance
Co., Philippine Branch. Official receipts indicating payment
for the full amount of the premium were issued by the
petitioner's agent.
A fire that broke out in the early morning, which
gutted and consumed the new oil mill.
Respondent immediately notified the petitioner of the
incident but petitioner rejected respondent's 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: "Our policy extend insurance coverage to
your oil mill under Building No. 5, whilst the affected oil mill
was under Building No. 14.
RTC ruled in favor of respondent Tantoco, CA
affirmed in toto the decision of the RTC

Issue:
Whether or not respondent violated the express
terms of the Fire Extinguishing Appliances Warranty?

Held:
No, the respondent did not violate the express
terms of the Fire Extinguishing Appliances Warranty

Ratio:
"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
which may occur."20
Petitioner argues that the warranty clearly
obligates the insured to maintain all the appliances
specified therein. The breach occurred when the
respondent failed to install internal fire hydrants inside the
burned building as warranted. This fact was admitted by the
oil mill's expeller operator.
Supreme Court agrees with the appellate court's
conclusion that the aforementioned warranty did not
require respondent to provide for all the fire extinguishing
appliances enumerated therein. Additionally, the Supreme
Court 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
QUA CHEE GAN VS LAW UNION AND ROCK
INSURANCE CO., LTD.
Doctrine:
Insurer is barred by estoppel to claim violation of
the warranty where knowing fully well of the deficiencies
demanded in the warranty, and nevertheless issued the
policies subject to such warranty and received the
corresponding premiums.
Even though there are printed prohibitions against
keeping certain articles on the insured premises the policy
will not be avoided by a violation of these prohibitions, if the
prohibited articles are necessary or in customary use in
carrying on the trade or business conducted on the
premises.
Facts:
Plaintiff-appellee owned four warehouses or
bodegas used for the storage of stocks of copra and of
hemp, baled and loose, in which the appellee dealth
extensively. They had been, with their contents, insured
with the defendant Company, and the lose made payable
to the Philippine National Bank as mortgage of the hemp
and crops, to the extent of its interest.
Fire of undetermined origin that broke out and
lasted almost one week, gutted and completely destroyed
Bodegas Nos. 1, 2 and 4, with the merchandise stored
therein.
Plaintiff-appellee informed the insurer by telegram
on the same day; and on the next day, the fire adjusters
engaged by appellant insurance company arrived and
proceeded to examine and photograph the premises, pored
over the books of the insured and conducted an extensive
investigation. The plaintiff having submitted the
corresponding fire claims, the Insurance Company resisted
payment, claiming violation of warranties and conditions,
filing of fraudulent claims, and that the fire had been
deliberately caused by the insured or by other persons in
connivance with him. Que Chee Gan, with his brother, Qua
Chee Pao, and some employees of his, were indicted and
tried for the crime of arson, it being claimed that they had
set fire to the destroyed warehouses to collect the
insurance. They were, however, acquitted by the trial court.
The civil suit to collect the insurance money
proceeded to its trial and termination in the Court below,
with the result noted at the start of this opinion. The
Philippine National Bank's complaint in intervention was
dismissed because the appellee had managed to pay his
indebtedness to the Bank during the pendecy of the suit,
and despite the fire losses. The insurance company alleges
that the trial court should have held that the policies were
avoided for breach of warranty, specifically the one
appearing on a rider pasted on the face of the policies.
These riders were attached, and the pertinent portions read
as follows:
Hydrants in the compound, not
less in number than one for each 150
feet of external wall measurement of
building, protected, with not less than
100 feet of hose piping and nozzles for
every two hydrants kept under cover in
convenient places, the hydrants being
supplied with water pressure by a
pumping engine, or from some other
source, capable of discharging at the
rate of not less than 200 gallons of water
per minute into the upper story of the
highest building protected, and a trained
brigade of not less than 20 men to work
the same.'
It is argued that since the bodegas insured had an
external wall perimeter of 500 meters or 1,640 feet, the
appellee should have eleven (11) fire hydrants in the
compound, and that he actually had only two (2), with a
further pair nearby, belonging to the municipality of Tabaco.
Issue:
1. Whether or not the appellant is barred by
waiver to claim violation of the so-called fire
hydrants warranty?
2. Whether or not warranty against storage of
gasoline was violated?
Held:
1. Yes, the appellant is barred by waiver to
claim violation of the so-called fire hydrants
warranty.
2. No, warranty against storage of gasoline was
not violated.
Ratio:
1. We are in agreement with the trial Court that 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 nevertheless issued the policies in question
subject to such warranty, and received the corresponding
premiums. It would be perilously close to conniving at fraud
upon the insured to allow appellant to claims now as void
ab initio the policies that it had issued to the plaintiff without
warning of their fatal defect, of which it was informed, and
after it had misled the defendant into believing that the
policies were effective.
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. 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 facts, and the insurer is stopped
thereafter from asserting the breach of such conditions.
The law is charitable enough to assume, in the
absence of any showing to the contrary, that 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, and to have
taken his money without consideration.
The inequitableness of the conduct observed by
the insurance company in this case is heightened by the
fact that after the insured had incurred the expense of
installing the two hydrants, the company collected the
premiums and issued him a policy so worded that it gave
the insured a discount much smaller than that he was not burned and where the gasoline was found, stood
normally entitled to. The alleged violation of the warranty of isolated from the other insured bodegas.
100 feet of fire hose for every two hydrants, must be equally
rejected, since the appellant's argument thereon is based Dispositive:
on the assumption that the insured was bound to maintain We find no reversible error in the judgment appealed from,
no less than eleven hydrants (one per 150 feet of wall), wherefore the smae is hereby affirmed. Costs against the
which requirement appellant is estopped from enforcing. appellant. So ordered.
The supposed breach of the water pressure condition is
made to rest on the testimony of witness Serra, that the
water supply could fill a 5-gallon can in 3 seconds;
appellant thereupon inferring that the maximum quantity
obtainable from the hydrants was 100 gallons a minute,
when the warranty called for 200 gallons a minute. The
transcript shows, however, that Serra repeatedly refused
and professed inability to estimate the rate of discharge of
the water, and only gave the "5-gallon per 3-second" rate
because the insistence of appellant's counsel forced the
witness to hazard a guess. Obviously, the testimony is
worthless and insufficient to establish the violation claimed,
especially since the burden of its proof lay on appellant.

2. Under the second assignment of error,

appellant insurance company avers, that the insured
violated the "Hemp Warranty" provisions, against the
storage of gasoline, since appellee admitted that there
were 36 cans (latas) of gasoline in the building designed as
"Bodega No. 2" that was a separate structure not affected
by the fire. It is well to note that 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 (animal and/or vegetable and/or
mineral and/or their liquid products having a flash point
below 3000 Fahrenheit", and is decidedly ambiguous and
uncertain; for in ordinary parlance, "Oils" mean "lubricants"
and not gasoline or kerosene. And how many insured, it
may well be wondered, are in a position to understand or
determine "flash point below 0030 Fahrenheit. Here, again,
by reason of the exclusive control of the insurance
company over the terms and phraseology of the contract,
the ambiguity must be held strictly against the insurer and
liberally in favor of the insured, especially to avoid a
forfeiture. Insurance is, in its nature, complex and difficult
for the layman to understand.

We see no reason why the prohibition of keeping

gasoline in the premises could not be expressed clearly
and unmistakably, in the language and terms that the
general public can readily understand.

Another point that is in favor of the insured is that

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."; and "according to the weight of authority, even
though there are printed prohibitions against keeping
certain articles on the insured premises the policy will not
be avoided by a violation of these prohibitions, if the
prohibited articles are necessary or in customary use in
carrying on the trade or business conducted on the
premises." It should also be noted that the "Hemp
Warranty" forbade storage only "in the building to which this
insurance applies and/or in any building communicating
therewith", and it is undisputed that no gasoline was stored
in the burned bodegas, and that "Bodega No. 2" which was
FIELDMEN’S INSURANCE ANCE COMPANY vs.
SONGCO
Doctrine:
Ambiguities or obscurities must be strictly
interpreted against the party that caused them, the 'memo
of warranty' invoked bars from questioning and estopped
when the conditions are impossible to comply with under
the existing conditions at that time and 'inconsistent with
the known facts. The insurer 'is estopped from asserting
breach of such conditions.
Facts:
Federico Songco, a man of scant education being
only a first grader, owned a private. On September 15,
1960, as such private vehicle owner, he was induced by
Fieldmen's Insurance Company Pampanga agent
Benjamin Sambat to apply for a Common Carrier's Liability
Insurance Policy covering his motor vehicle. Upon paying
an annual premium, defendant Fieldmen's Insurance
Company, Inc. issued on September 19, 1960, Common
Carriers Accident Insurance Policy, the duration of which
will be for one (1) year. The policy was renewed by
extending the period of effectivity. During the effectivity of
the renewed policy, the insured vehicle while being driven
by Rodolfo Songco, a duly licensed driver and son of
Federico (the vehicle owner) collided with a car in the
municipality of Calumpit, province of Bulacan, as a result of
which mishap Federico Songco (father) and Rodolfo
Songco (son) died, Carlos Songco (another son), the
latter's wife, Angelita Songco, and a family friend by the
name of Jose Manuel sustained physical injuries of varying
degree.
It was further shown according to the decision of
respondent Court of Appeals: "Amor Songco, 42-year-old
son of deceased Federico Songco, testifying as witness,
declared that when insurance agent Benjamin Sambat was
inducing his father to insure his vehicle, he butted in saying:
'That cannot be, Mr. Sambat, because our vehicle is an
"owner" private vehicle and not for passengers,' to which
agent Sambat replied: 'whether our vehicle was an "owner"
type or for passengers it could be insured because their
company is not owned by the Government and the
Government has nothing to do with their company. So they
could do what they please whenever they believe a vehicle
is insurable.
Petitioner Fieldmen's Insurance Co., Inc., was not
allowed to escape liability by the lower courts under a
common carrier insurance policy on the pretext that what
was insured, not once but twice, was a private vehicle and
not a common carrier, the policy being issued upon the
insistence of its agent who discounted fears of the insured
that his privately owned vehicle might not fall within its
terms, the insured moreover being "a man of scant
education," finishing only the first grade.
Issue:
Whether or not Fieldmen’s Insurance Co. may
raise breach of warranty and condition in policy as defense,
so as to escape liability?
Held:
NO. Fieldmen’s Insurance Co. cannot raise
breach of warranty and condition in policy as defense, so
as to escape liability.
Ratio
As much, if not much more so than the Qua Chee
Gan decision, this is a case where the doctrine of estoppel
undeniably calls for application. After petitioner Fieldmen's
Insurance Co., Inc. had led the insured Federico Songco to
believe that he could qualify under the common carrier
liability insurance policy, and to enter into contract of
insurance paying the premiums due, it could not, thereafter,
in any litigation arising out of such representation, be
permitted to change its stand to the detriment of the heirs
of the insured. As estoppel is primarily based on the
doctrine of good faith and the avoidance of harm that will
befall the innocent party due to its injurious reliance, the
failure to apply it in this case would result in a gross travesty
of justice.
That is all that needs be said insofar as the first
alleged error of respondent Court of Appeals is concerned,
petitioner being adamant in its far-from-reasonable plea
that estoppel could not be invoked by the heirs of the
insured as a bar to the alleged breach of warranty and
condition in the policy. lt would now rely on the fact that the
insured owned a private vehicle, not a common carrier,
something which it knew all along when not once but twice
its agent, no doubt without any objection in its part, exerted
the utmost pressure on the insured, a man of scant
education, to enter into such a contract.
Nor is there any merit to the second alleged error
of respondent Court that no legal liability was incurred
under the policy by petitioner. Why liability under the terms
of the policy was inescapable was set forth in the decision
of respondent Court of Appeals. Thus: "Since some of the
conditions contained in the policy issued by the defendant-
appellant were impossible to comply with under the existing
conditions at the time and 'inconsistent with the known
facts,' the insurer 'is estopped from asserting breach of
such conditions.
Even if it be assumed that there was an ambiguity,
an excerpt from the Qua Chee Gan decision would reveal
anew the weakness of petitioner's contention. Thus:
"Moreover, taking into account the well known rule that
ambiguities or obscurities must be strictly interpreted
against the party that caused them, the 'memo of warranty'
invoked by appellant bars the latter from questioning the
existence of the appliances called for in the insured
premises, since its initial expression, 'the undernoted
appliances for the extinction of fire being kept on the
premises insured hereby, ... it is hereby warranted ...,'
admits of interpretation as an admission of the existence of
such appliances which appellant cannot now contradict,
should the parol evidence rule apply”.
Dispositive:
Respondents won. Petitioner is held liable and
was considered estopped.
PIONEER V YAP
Doctrine:
And considering the terms of the policy which
required the insured to declare other insurances, the
statement in question must be deemed to be a statement
(warranty) binding on both insurer and insured, that there
were no other insurance on the property. ...
The annotation then, must be deemed to be a
warranty that the property was not insured by any other
policy. Violation thereof entitled the insurer to rescind. (Sec.
69, Insurance Act.) Such misrepresentation is fatal in the
light of our views in Santa Ana vs. Commercial Union
Assurance Company, Ltd., 55 Phil. 329. The materiality of
non-disclosure of other insurance policies is not open to
doubt.
Furthermore, even if the annotations were
overlooked the defendant insurer would still be free from
liability because there is no question that the policy issued
by General Indemnity has not been stated in nor endorsed
on Policy No. 471 of defendant. And as stipulated in the
above-quoted provisions of such policy "all benefit under
this policy shall be forfeited
Facts:
Respondent Oliva Yap was the owner of a store
in a two-storey building where she sold shopping bags and
footwear. Chua Soon Poon, her son-in-law, was in charge
of the store. Yap took out Respondent Oliva Yap was the
owner of a store in a two-storey building where she sold
shopping bags and footwear. Chua Soon Poon, her son-in-
law, was in charge of the store. Yap took out a Fire
Insurance Policy No. 4216 from Pioneer Insurance with a
value of P25,000.00 covering her stocks, office furniture,
fixtures and fittings.Among the conditions in the policy
executed by the parties are the following:
unless such notice be given
and the particulars of such insurance or
insurances be stated in, or endorsed on
this Policy by or on behalf of the
Company before the occurrence of any
loss or damage, all benefits under this
Policy shall be forfeited… Any false
declaration or breach or this condition
will render this policy null and void.
Another insurance policy for P20,000.00
issued by Great American covering the
same properties. The endorsement
recognized co-insurance by Northwest
for the same value.
Oliva Yap took out another fire insurance policy for
P20,000.00 covering the same properties from the Federal
Insurance Company, Inc., which was procured without
notice to and the written consent of Pioneer.
A fire broke out in the building, and the store was
burned. Yap filed an insurance claim, but the same was
denied for a breach.Oliva Yap filed a case for payment of
the face value of her fire insurance policy. The insurance
company refused to pay because she never informed
Pioneer of another insurer. The trial court decided in favor
of Yap. The CA affirmed.
Issue:
Whether or not petitioner should be absolved from
liability on the Pioneeer policy on account of any violation
of the co-insurance clause?
Held:
No, petitioner should be not be absolved from
liability on the Pioneeer policy on account of any violation
of the co-insurance clause .
Ratio:
There was violation. The insurance policy for
P20,000.00 issued by the Great American, ceased to be
recognized by them as a co-insurance policy. The
endorsement shows the clear intention of the parties to
recognize on the date the endorsement was made, the
existence of only one co-insurance, the Northwest one. The
finding of the Court of Appeals that the Great American
Insurance policy was substituted by the Federal Insurance
policy is indeed contrary to said stipulation.Other insurance
without the consent of Pioneer would avoid the contract. It
required no affirmative act of election on the part of the
company to make operative the clause avoiding the
contract, wherever the specified conditions should occur.
Its obligations ceased, unless, being informed of the fact, it
consented to the additional insurance. The validity of a
clause in a fire insurance policy to the effect that the
procurement of additional insurance without the consent of
the insurer renders the policy void is in American
jurisprudence.Milwaukee Mechanids' Lumber Co., vs.
Gibson- "The rule in this state and practically all of the
states is to the effect that a clause in a policy to the effect
that the procurement of additional insurance without the
consent of the insurer renders the policy void is a valid
provision.”
In this jurisdiction, General Insurance & Surety
Corporation vs. Ng Hua- “The annotation then, must be
deemed to be a warranty that the property was not insured
by any other policy. Violation thereof entitled the insurer to
rescind. Furthermore, even if the annotations were
overlooked the defendant insurer would still be free from
liability because there is no question that the policy issued
by General Indemnity has not been stated in nor endorsed
on Policy No. 471 of defendant. The obvious purpose of the
aforesaid requirement in the policy is to prevent over-
insurance and thus avert the perpetration of fraud where a
fire would be profitable to the insured.”
Dispositive:
Insurance Pioneer Won
PRUDENTIAL GUARANTEE V TRANS ASIA (2006)
Doctrine:
A warranty is a statement or promise set forth in
the policy, or by reference incorporated therein, the untruth
or non-fulfillment of which in any respect, and without
reference to whether the insurer was in fact prejudiced by
such untruth or non-fulfillment, renders the policy voidable
by the insurer. However it must be first duly proven by the
one who alleges that there was a breach of warranty.
Facts:
TRANS-ASIA is the owner of the vessel M/V Asia
Korea. In consideration of payment of premiums,
PRUDENTIAL insured M/V Asia Korea for loss/damage of
the hull and machinery arising from perils, inter alia, of fire
and explosion for the sum of P40 Million, beginning from
the period of July 1, 1993 up to July 1, 1994.
On October 25, 1993, while the policy was in
force, a fire broke out while M/V Asia Korea was
undergoing repairs at the port of Cebu. On October 26,
1993 TRANS-ASIA filed its notice of claim for damage
sustained by the vessel evidenced by a letter/formal claim.
TRANS-ASIA reserved its right to subsequently notify
PRUDENTIAL as to the full amount of the claim upon final
survey and determination by average adjuster Richard
Hogg International (Phil.) of the damage sustained by
reason of fire.
TRANS-ASIA executed a document denominated
"Loan and Trust receipt", a portion of which states that
“Received from Prudential Guarantee and Assurance, Inc.,
the sum of PESOS THREE MILLION ONLY
(P3,000,000.00) as a loan without interest under Policy No.
MH 93/1353 [sic], repayable only in the event and to the
extent that any net recovery is made by Trans-Asia
Shipping Corporation, from any person or persons,
corporation or corporations, or other parties, on account of
loss by any casualty for which they may be liable
occasioned by the 25 October 1993: Fire on Board."
PRUDENTIAL later on denied Trans-Asia’s claim
in stated in a letter that "After a careful review and
evaluation of your claim arising from the above-captioned
incident, it has been ascertained that you are in breach of
policy conditions, among them "WARRANTED VESSEL
CLASSED AND CLASS MAINTAINED". Accordingly, we
regret to advise that your claim is not compensable and
hereby DENIED." and asked for the return of the 3,000,000.
TRANS-ASIA filed a Complaint for Sum of Money
against PRUDENTIAL with the RTC of Cebu City, wherein
TRANS-ASIA sought the amount of P8,395,072.26 from
PRUDENTIAL, alleging that the same represents the
balance of the indemnity due upon the insurance policy in
the total amount of P11,395,072.26. TRANS-ASIA similarly
sought interest at 42% per annum citing Section 243 of
Presidential Decreee No. 1460, otherwise known as the
"Insurance Code," as amended.
PRUDENTIAL denied the material allegations of
the Complaint and interposed the defense that TRANS-
ASIA breached insurance policy conditions, in particular:
PRUDENTIAL posits that TRANS-ASIA violated an
express and material warranty in the subject insurance
contract, i.e., Marine Insurance Policy No. MH93/1363,
specifically Warranty Clause No. 5 thereof, which stipulates
that the insured vessel, "M/V ASIA KOREA" is required to
be CLASSED AND CLASS MAINTAINED. According to
PRUDENTIAL, on 25 October 1993, or at the time of the
occurrence of the fire, "M/V ASIA KOREA" was in violation
of the warranty as it was not CLASSED AND CLASS
MAINTAINED. PRUDENTIAL submits that Warranty
Clause No. 5 was a condition precedent to the recovery of
TRANS-ASIA under the policy, the violation of which
entitled PRUDENTIAL to rescind the contract under Sec.
74 of the Insurance Code. By way of a counterclaim,
PRUDENTIAL sought a refund of P3,000,000.00, which it
allegedly advanced to TRANS-ASIA by way of a loan
without interest and without prejudice to the final evaluation
of the claim, including the amounts of P500,000.00, for
survey fees and P200,000.00, representing attorney’s fees.
Trial court ruled in favor of Prudential. It ruled that
a determination of the parties’ liabilities hinged on whether
TRANS-ASIA violated and breached the policy conditions
on WARRANTED VESSEL CLASSED AND CLASS
MAINTAINED. It interpreted the provision to mean that
TRANS-ASIA is required to maintain the vessel at a certain
class at all times pertinent during the life of the policy.
According to the court a quo, TRANS-ASIA failed to prove
compliance of the terms of the warranty, the violation
thereof entitled PRUDENTIAL to rescind the contract.
The Court of Appeals reversed the decision. It
ruled that PRUDENTIAL, as the party asserting the non-
compensability of the loss had the burden of proof to show
that TRANS-ASIA breached the warranty, which burden it
failed to discharge. PRUDENTIAL cannot rely on the lack
of certification to the effect that TRANS-ASIA was
CLASSED AND CLASS MAINTAINED as its sole basis for
reaching the conclusion that the warranty was breached. It
opined that the lack of a certification does not necessarily
mean that the warranty was breached by TRANS-ASIA.
Instead, it considered PRUDENTIAL’s admission that at
the time the insurance contract was entered into between
the parties, the vessel was properly classed by Bureau
Veritas, a classification society recognized by the industry.
It similarly gave weight to the fact that it was the
responsibility of Richards Hogg International (Phils.) Inc.,
the average adjuster hired by PRUDENTIAL, to secure a
copy of such certification to support its conclusion that
mere absence of a certification does not warrant denial of
TRANS-ASIA’s claim under the insurance policy.
Issue:
Whether or not Trans-Asia breached the warranty
stated in the insurance policy, thus absolving Prudential
from paying Trans-Asia?
Held:
No, Trans-Asia did not breach the warranty stated
in the insurance policy, thus absolving Prudential from
paying Trans-Asia.
Ratio
As found by the Court of Appeals and as
supported by the records, Bureau Veritas is a classification
society recognized in the marine industry. As it is
undisputed that TRANS-ASIA was properly classed at the
time the contract of insurance was entered into, thus, it
becomes incumbent upon PRUDENTIAL to show evidence
that the status of TRANS-ASIA as being properly
CLASSED by Bureau Veritas had shifted in violation of the
warranty. Unfortunately, PRUDENTIAL failed to support Dispositive:
the allegation. Trans-Asia won

The lack of a certification in PRUDENTIAL’s

records to the effect that TRANS-ASIA’s "M/V Asia Korea"
was CLASSED AND CLASS MAINTAINED at the time of
the occurrence of the fire cannot be tantamount to the
conclusion that TRANS-ASIA in fact breached the warranty
contained in the policy.

It was likewise the responsibility of the average

adjuster, Richards Hogg International (Phils.), Inc., to
secure a copy of such certification, and the alleged breach
of TRANS-ASIA cannot be gleaned from the average
adjuster’s survey report, or adjustment of particular
average per "M/V Asia Korea" of the 25 October 1993 fire
on board.

The Supreme Court is not unmindful of the clear

language of Sec. 74 of the Insurance Code which provides
that, "the violation of a material warranty, or other material
provision of a policy on the part of either party thereto,
entitles the other to rescind." It is generally accepted that
"a warranty is a statement or promise set forth in the policy,
or by reference incorporated therein, the untruth or non-
fulfillment of which in any respect, and without reference to
whether the insurer was in fact prejudiced by such untruth
or non-fulfillment, renders the policy voidable by the
insurer."

However, it is similarly indubitable that for the

breach of a warranty to avoid a policy, the same must be
duly shown by the party alleging the same. We cannot
sustain an allegation that is unfounded. Consequently,
PRUDENTIAL, not having shown that TRANS-ASIA
breached the warranty condition, CLASSED AND CLASS
MAINTAINED, it remains that TRANS-ASIA must be
allowed to recover its rightful claims on the policy.

Assuming arguendo that TRANS-ASIA violated

the policy condition on WARRANTED VESSEL CLASSED
AND CLASS MAINTAINED, PRUDENTIAL made a valid
waiver of the same.

PRUDENTIAL can be deemed to have made a

valid waiver of TRANS-ASIA’s breach of warranty as
alleged. Because after the loss, Prudential renewed the
insurance policy of Trans-Asia for two (2) consecutive
years, from noon of 01 July 1994 to noon of 01 July 1995,
and then again until noon of 01 July 1996. This renewal is
deemed a waiver of any breach of warranty.

PRUDENTIAL, in renewing TRANS-ASIA’s insurance

policy for two consecutive years after the loss covered by
Policy No. MH93/1363, was considered to have waived
TRANS-ASIA’s breach of the subject warranty, if any.
Breach of a warranty or of a condition renders the contract
defeasible at the option of the insurer; but if he so elects,
he may waive his privilege and power to rescind by the
mere expression of an intention so to do. In that event his
liability under the policy continues as before. There can be
no clearer intention of the waiver of the alleged breach than
the renewal of the policy insurance granted by
PRUDENTIAL to TRANS-ASIA in MH94/1595 and
MH95/1788, issued in the years 1994 and 1995,
respectively.
GENERAL INSURANCE V NG HUA
Doctrine:
The statement in question must be deemed to be
a statement (warranty) binding on both insurer and insured,
that there were no other insurance on the property.
Facts:
General Insurance and Surety Corporation issued
its Insurance Policy No. 471, insuring against fire, for 1
year, the stock in trade of the Central Pomade Factory
owned by Ng Hua. The policy covered damages up to
P10,000.00. The next day, Pomade factory building
burned. Ng Hua claimed indemnity from the insurer. After
some negotiations and upon suggestion of the Manila
Adjustment Company, he reduced the claim of P5,000.00.
Nevertheless, the insurer refused to pay for various
reasons, namely (a) action was not filed in time; (b)
violation of warranty; (c) submission of fraudulent claim;
and (f) failure to pay the premium. The aforesaid Policy No.
471 contains this stipulation on the back thereof:
3. The insured shall give notice to the company of
any insurance or insurances already affected, or
which may subsequently be effected, covering
any of the property hereby insured, and unless
such notice be given and the particulars of such
insurance or insurances be stated in or endorsed
on this Policy by or on behalf of the Company
before the occurrence of any loss or damage, all
benefits under the policy shall be forfeited.
The face of the policy bore the annotation: "Co-
Insurance Declared — NIL"
TC and CA, referring to the annotation and
overruling the defense, held that there was no violation of
the above clause, inasmuch as "co-insurance exists when
a condition of the policy requires the insured to bear ratable
proportion of the loss when the value of the insured
property exceeds the face value of the policy," hence there
is no co-insurance here.
Issue:
Whether or not there is breach of warranty of the
above stipulation?
Held:
Yes, there is breach of warranty of the above
stipulation.
Ratio:
It is undenied that Ng Hua had obtained fire
insurance on the same goods, for the same period of time,
in the amount of P20,000.00 from General Indemnity Co.
Hence, there is co-insurance.
The statement in question must be deemed to be
a statement (warranty) binding on both insurer and insured,
that there were no other insurance on the property.
Remember it runs "Co-Insurance declared"; emphasis on
the last word. If "Co-Insurance" means that the Court of
Appeals says, the annotation served no purpose. The
annotation then, must be deemed to be a warranty that the
property was not insured by any other policy. Violation
thereof entitles the insurer to rescind. (Sec. 69. Insurance
Act).
Ng Hua alleges "actual knowledge" on the part of
General insurance of the fact that he had taken out
additional insurance with General Indemnity. However, CA
found no evidence of such knowledge. Indeed, this
concealment and violation was expressly set up as a
special defense in the answer.
Petitioner successfully established its defense of
warranty breach or concealment of the other insurance
and/or violation of the provision of the policy above-
mentioned.
Dispositive:
Petitioner acquitted from all the liability under the
policy.
Note: Marine insurance is huge. The insurance commission
will usually will not put everything in put in one basket and
reinsure most of the time.
H. Premium – paid by the insurer to insured for
indemnity.
Section 77 of Insurance Code
An insurer is entitled to payment of the premium as soon
as the thing insured is exposed to the peril insured
against. Notwithstanding any agreement to the contrary,
no policy or contract of insurance issued by an insurance
company is valid and binding unless and until the premium
thereof has been paid, except in the case of a life or an
industrial life policy whenever the grace period provision
applies.
Section 78 of Insurance Code
An acknowledgment in a policy or contract of insurance or
the receipt of premium is conclusive evidence of its
payment, so far as to make the policy binding,
notwithstanding any stipulation therein that it shall not be
binding until the premium is actually paid.
Section 79 of Insurance Code
A person insured is entitled to a return of premium, as
follows:
(a) To the whole premium if no part of his
interest in the thing insured be exposed to any
of the perils insured against;
(b) Where the insurance is made for a definite
period of time and the insured surrenders his
policy, to such portion of the premium as
corresponds with the unexpired time, at a pro
rata rate, unless a short period rate has been
agreed upon and appears on the face of the
policy, after deducting from the whole premium
any claim for loss or damage under the policy
which has previously accrued; Provided, That
no holder of a life insurance policy may avail
himself of the privileges of this paragraph
without sufficient cause as otherwise provided
by law.
Section 80 of Insurance Code
If a peril insured against has existed, and the insurer has
been liable for any period, however short, the insured is not
entitled to return of premiums, so far as that particular risk
is concerned.
Section 81 of Insurance Code
A person insured is entitled to return of the premium when
the contract is voidable, on account of fraud or
misrepresentation of the insurer, or of his agent, or on
account of facts, the existence of which the insured was
ignorant without his fault; or when by any default of the
insured other than actual fraud, the insurer never incurred
any liability under the policy.

Section 82 of Insurance Code

In case of over-insurance by several insurers, the insured
is entitled to a ratable return of the premium, proportioned
to the amount by which the aggregate sum insured in all
the policies exceeds the insurable value of the thing at risk.

Section 83 of Insurance Code

An agreement not to transfer the claim of the insured
against the insurer after the loss has happened, is void if
made before the loss except as otherwise provided in the
case of life insurance.

Section 84 of Insurance Code

Unless otherwise provided by the policy, an insurer is liable
for a loss of which a peril insured against was the proximate
cause, although a peril not contemplated by the contract
may have been a remote cause of the loss; but he is not
liable for a loss which the peril insured against was only a
remote cause.

Note: - As soon the things is insured is at peril, it

becomes due. The time is an essence.
Example: when the ship is at voyage then it is in
peril but if at docked then not at peril of the sea.
- The credit extension cannot exceed than 90
day. It is an attempt to determine that the
premium is paid.
- Agreement to extend on to agreement is
binding under case law but not under law.
Time is of the essence is the payment of
premium.