UNION MANUFACTURING CO., INC. VS. PHILIPPINE GUARANTYCO., INC.47 SCRA 271 (G.R. NO.

L27932)OCTOBER 30, 1972 Petitioner: Republic Bank Respondent: Philippine Guaranty Co.. Inc. FACTS:On January 12, 1962, the Union Manufacturing Co., Inc. obtained certain loans from the Republic Bank in the total sum of 415,000.00. To secure the payment thereof, UMC executed real and chattel mortgage on certain properties. The Republic Bank procured from the defendant Philippine Guaranty Co., Inc. an insurance coverage on loss against fire for 500,000.00 over the properties of the UMC, as described in defendants cover note dated September 25, 1962, with the annotation that loss or damage, if any, under said cover note is payable to Republic Bank as its interest may appear, subject however to the printed conditions of said defendants Fire Insurance Policy Form. On September 6, 1964, a fire occurred in the premises of UMC and on October 6, 1964, UMC filed its fire claim with the PGC Inc., thru its adjuster, H.H. Bayne Adjustment Co., which was denied by said defendant in its letter dated November 26, 1964 on the following ground: Policy Condition No. 3 and/or the Other Insurance Clause of the policy was violated because you did not give notice to us of the other insurance which you had taken from New India for 80,000.00. Sincere Insurance for 25,000.00 and Manila Insurance for 200,000.00 with the result that these insurances of which we became aware of only after the fire, were not endorsed on our policy. ISSUE: Whether Republic Bank can recover. HELD: 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, we hold that in the absolute absence of such notice when it isone of the conditions specified in the fire insurance policy, the policy is null and void. (Santa Ana vs. Commercial Union Ass. Co., 55 Phil. 128).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 functions and duty of the courts consist simply in enforcing and carrying out the contracts actually made. While it is true, as a general rule, that contracts of insurance are construed most favorably to the insured, yet contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties themselves have used. If such terms are clear and unambiguous they must be taken and understood in their plain, ordinary and popular sense. 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. The materiality of non-disclosure of other insurance policies is not open to doubt. The insurance contract may be rather onerous, but that in itself does not justify the abrogation of its express terms, terms which the insured accepted or adhered to and which is the law between the contracting parties.