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    Fire Insurance - Pacific Banking Corp Vs CA

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    MarioneMaeThiam
    Pacific Banking Corp. filed a claim against Oriental Assurance Corporation for a fire loss covered under an insurance policy issued to Paramount Shirt Manufacturing. The court ruled in favor of Oriental Assurance for two reasons: 1) Paramount failed to disclose the existence of other co-insurance policies covering the same property, which was a violation of the policy terms and constituted misrepresentation. 2) Pacific filed suit prematurely without first submitting a formal claim and proof of loss documents to Oriental Assurance as required by the policy terms, therefore no rejection of claim had occurred to trigger a lawsuit.

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    Fire Insurance - Pacific Banking Corp Vs CA

    Uploaded by

    MarioneMaeThiam
    189 views2 pages
    Pacific Banking Corp. filed a claim against Oriental Assurance Corporation for a fire loss covered under an insurance policy issued to Paramount Shirt Manufacturing. The court ruled in favor of Oriental Assurance for two reasons: 1) Paramount failed to disclose the existence of other co-insurance policies covering the same property, which was a violation of the policy terms and constituted misrepresentation. 2) Pacific filed suit prematurely without first submitting a formal claim and proof of loss documents to Oriental Assurance as required by the policy terms, therefore no rejection of claim had occurred to trigger a lawsuit.

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    Insurance Law Digest

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    Fire Insurance - Pacific Banking Corp vs CA

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    Pacific Banking Corp. filed a claim against Oriental Assurance Corporation for a fire loss covered under an insurance policy issued to Paramount Shirt Manufacturing. The court ruled in favor of Oriental Assurance for two reasons: 1) Paramount failed to disclose the existence of other co-insurance policies covering the same property, which was a violation of the policy terms and constituted misrepresentation. 2) Pacific filed suit prematurely without first submitting a formal claim and proof of loss documents to Oriental Assurance as required by the policy terms, therefore no rejection of claim had occurred to trigger a lawsuit.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    189 views2 pages

    Fire Insurance - Pacific Banking Corp Vs CA

    Uploaded by

    MarioneMaeThiam
    Pacific Banking Corp. filed a claim against Oriental Assurance Corporation for a fire loss covered under an insurance policy issued to Paramount Shirt Manufacturing. The court ruled in favor of Oriental Assurance for two reasons: 1) Paramount failed to disclose the existence of other co-insurance policies covering the same property, which was a violation of the policy terms and constituted misrepresentation. 2) Pacific filed suit prematurely without first submitting a formal claim and proof of loss documents to Oriental Assurance as required by the policy terms, therefore no rejection of claim had occurred to trigger a lawsuit.

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    © All Rights Reserved
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    of 2

    PACIFIC BANKING CORP. VS.

    COURT OF APPEALS AND ORIENTAL ASSURANCE


    CORPORATION
    168 SCRA 1 [1988]

    Topic: Fire Insurance

    FACTS:
    An open Fire Policy issued to Paramount Shirt Manufacturing for Php61,000 on the
    following: stocks, materils, supplies, furniture, fixture, machinery, equipment contained
    on the 1st to 3rd floors. Insurance is for a year starting 21 OCTOBER 1964.
    Paramount Shirt is debtor of Pacific Banking amounting to Php800,000. Goods in
    policy were held in trust by Paramount for Pacific under thrust receipts. Fire broke out on
    4 January 1964.
    Pacific sent letter of demand to Oriental. Insurance Adjuster of Oriental notified
    Pacific to submit proof of loss pursuant to Policy Condition 11. Pacific did not accede
    but asked Insurance Adjuster to verify records form Bureau of Customs.
    Pacific filed for sum of money against Oriental. Oriental alleged that Pacific
    prematurely filed a suit, for neither filing a formal claim over loss pursuant to policy nor
    submitting any proof of loss.
    Trial court decided in favor of Pacific. Decision based on technicality. The
    defense of lack of proof of loss and defects were raised for the 1st time. (On
    presentation of evidences by Pacific, it was revealed there was violation of Condition
    No.3, there were undeclared co-insurances under same property –Wellington, Empire,
    Asian. The only declared co-insurances were Malayan, South Sea, and Victory)
    CA reversed decision. Concealment of other co-insurances is a
    misrepresentation and can easily be fraud.

    ISSUES:
    (1) Whether or not unrevealed con-insurances is a violation of Policy Condition No.3
    (2) Whether or not there was premature filing of action

    RULING:
    (1) Yes.
    Policy Condition 3 provides that the insured must give notice of any
    insurance already in effect or subsequently be in effect covering same property
    being insured. Failure to do so, the policy shall be forfeited.
    Failure to reveal before the loss of the 3 other insurances is a clear
    misrepresentation or a false declaration. The material fact was asked for but was
    not revealed. Representations of facts are the foundations of the contract.
    Pacific itself provided for the evidences in trial court that proved existence of
    misrepresentation.

    (2) Yes.
    Policy Condition 11 is a sine qua non requirement for maintaining action. It
    requires that documents necessary to prove and estimate the loss should be
    included with notice of loss. Pacific failed to submit formal claim of loss with
    supporting documents but shifted the burden to the insurance company. Failing
    to submit claim is failure for insurance company to reject claim. Thus, a lack of
    cause of action to file suit.
    Furthermore, the mortgage clause in the policy specifically provides that
    the policy is invalidated by reasons of FRAUD, MISREPRESENTATION and FRAUD.
    Concealment can easily be fraud or misrepresentation.
    The insured – PARAMOUNT is not entitled to proceeds. Moreso, Pacific as
    indorsee of policy is not entitled.

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