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    Development Insurance vs. IAC

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    Courtney Tirol
    The court affirmed the lower court's ruling that the insured was entitled to the full indemnity amount from the fire damage. The insurance policy was an "open policy" where the actual loss determined represents the total indemnity, not to exceed the policy face value. There was no evidence the building was worth more than insured. The insurer's arguments that it was not liable for elevator damage or that the insured was partially self-insured were rejected.

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    Development Insurance vs. IAC

    Uploaded by

    Courtney Tirol
    243 views3 pages
    The court affirmed the lower court's ruling that the insured was entitled to the full indemnity amount from the fire damage. The insurance policy was an "open policy" where the actual loss determined represents the total indemnity, not to exceed the policy face value. There was no evidence the building was worth more than insured. The insurer's arguments that it was not liable for elevator damage or that the insured was partially self-insured were rejected.

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    Open Policy

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    2. Development Insurance vs. IAC

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    The court affirmed the lower court's ruling that the insured was entitled to the full indemnity amount from the fire damage. The insurance policy was an "open policy" where the actual loss determined represents the total indemnity, not to exceed the policy face value. There was no evidence the building was worth more than insured. The insurer's arguments that it was not liable for elevator damage or that the insured was partially self-insured were rejected.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    243 views3 pages

    Development Insurance vs. IAC

    Uploaded by

    Courtney Tirol
    The court affirmed the lower court's ruling that the insured was entitled to the full indemnity amount from the fire damage. The insurance policy was an "open policy" where the actual loss determined represents the total indemnity, not to exceed the policy face value. There was no evidence the building was worth more than insured. The insurer's arguments that it was not liable for elevator damage or that the insured was partially self-insured were rejected.

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    © All Rights Reserved
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    Tirol It then went to the respondent court, which

    affirmed the decision of the trial court in


    2. Development Insurance Corporation vs. toto. Hence, this petition.
    Intermediate Appellate Court & Philippine
    Union Realty Development Corporation The petitioner insurance company argues
    that since at the time of the fire the building
    Insurer: Development Insurance Corp. insured was worth P5,800,000.00, the
    Insured: Philippine Union Realty private respondent should be considered its
    Development Corp. own insurer for the difference between that
    Beneficiary: N/A amount and the face value of the policy and
    Other significant parties: N/A should share pro rata in the loss sustained.
    Accordingly, the private respondent is
    Doctrine: As defined in the aforestated entitled to an indemnity of only P67,629.31,
    provision, which is now Section 60 of the the rest of the loss to be shouldered by it
    Insurance Code, "an open policy is one in alone. In support of this contention, the
    which the value of the thing insured is not petitioner cites Condition 17 of the policy,
    agreed upon but is left to be ascertained which provides:
    in case of loss. " This means that the actual
    loss, as determined, will represent the If the property hereby insured shall,
    total indemnity due the insured from the at the breaking out of any fire, be
    insurer except only that the total collectively of greater value than the
    indemnity shall not exceed the face value sum insured thereon then the
    of the policy. insured shall be considered as being
    his own insurer for the difference,
    Facts: A fire occurred in the building of and shall bear a ratable proportion
    Private Respondent (Philippine Union Realty of the loss accordingly. Every item, if
    Development Corp.), and it sued for recovery more than one, of the policy shall be
    of damages from the Petitioner separately subject to this condition.
    (Development Insurance Corp.) on the basis
    of an insurance contract between them. Issue: Whether the private respondent
    should be considered its own insurer for the
    The petitioner allegedly failed to answer on difference between that amount and the
    time and was declared in default by the trial face value of the policy and should share pro
    court. A judgment of default was rata in the loss sustained
    subsequently rendered on the strength of
    the evidence submitted ex parte by the Ruling: NO. The only remaining question to
    private respondent, which was allowed full be settled is the amount of the indemnity
    recovery of its claimed damages. due to the private respondent under its
    insurance contract with the petitioner. This
    On learning of this decision, the petitioner will require an examination of this contract,
    moved to lift the order of default, invoking Policy No. RY/F-082, as renewed, by virtue of
    excusable neglect, and to vacate the which the petitioner insured the private
    judgment by default. Its motion was denied. respondent's building against fire for
    P2,500,000.00.
    This means that the actual loss, as
    Contrary to petitioner’s argument, there is determined, will represent the total
    no evidence on record that the building was indemnity due the insured from the insurer
    worth P5,800,000.00 at the time of the loss. except only that the total indemnity shall not
    Only the petitioner says so and it does not exceed the face value of the policy.
    back up its self-serving estimate with any
    independent corroboration. The actual loss has been ascertained in this
    case and, to repeat, this Court will respect
    On the contrary, the building was insured at such factual determination in the absence of
    P2,500,000.00, and this must be considered, proof that it was arrived at arbitrarily. There
    by agreement of the insurer and the insured, is no such showing.
    the actual value of the property insured on
    the day the fire occurred. This valuation Hence, applying the open policy clause as
    becomes even more believable if it is expressly agreed upon by the parties in
    remembered that at the time the building their contract, we hold that the private
    was burned it was still under construction respondent is entitled to the payment of
    and not yet completed. indemnity under the said contract in the
    total amount of P508,867.00.
    The Court notes that Policy RY/F-082 is an
    open policy and is subject to the express The refusal of its vice-president to receive
    condition that: the private respondent's complaint, as
    reported in the sheriff's return, was the first
    Open Policy indication of the petitioner's intention to
    prolong this case and postpone the
    This is an open policy as defined in discharge of its obligation to the private
    Section 57 of the Insurance Act. In respondent under this agreement. That
    the event of loss, whether total or intention was revealed further in its
    partial, it is understood that the subsequent acts-or inaction-which indeed
    amount of the loss shall be subject to enabled it to avoid payment for more than
    appraisal and the liability of the five years from the filing of the claim against
    company, if established, shall be it in 1980. The petitioner has temporized
    limited to the actual loss, subject to long enough to avoid its legitimate
    the applicable terms, conditions, responsibility; the delay must and does end
    warranties and clauses of this Policy, now.
    and in no case shall exceed the
    amount of the policy. Dispositive: WHEREFORE, the appealed
    decision is affirmed in full, with costs against
    As defined in the aforestated provision, the petitioner.
    which is now Section 60 of the Insurance
    Code, "an open policy is one in which the NOTE: On the question of default, the record
    value of the thing insured is not agreed argues mightily against it. It is indisputable
    upon but is left to be ascertained in case of that summons was served on it, through its
    loss." senior vice-president, 10 days after the
    expiration of the original 15-day period to
    answer, its counsel filed an ex parte motion
    for an extension of five days within which to
    file its answer. Onthe last day of the
    requested extension -which at the time had
    not yet been granted- the same counsel filed
    a second motion for another 5-day
    extension, 14 days after the expiry of the
    original period to file its answer. The trial
    court nevertheless gave it five days within
    which to file its answer. But it did not. It did
    so onlyafter the expiry of the original and
    extended periods, or 21 days after the July 5,
    deadline. As a consequence, the trial court,
    on motion of the private respondent
    declared the petitioner in default.

    The petitioner's claim that the insurance


    covered only the building and not the
    elevators is absurd, to say the least. This
    Court has little patience with puerile
    arguments that affront common sense, let
    alone basic legal principles with which even
    law students are familiar. The circumstance
    that the building insured is seven stories high
    and so had to be provided with elevators-a
    legal requirement known to the petitioner as
    an insurance company-makes its contention
    all the more ridiculous. No less preposterous
    is the petitioner's claim that the elevators
    were insured after the occurrence of the fire,
    a case of shutting the barn door after the
    horse had escaped, so to speak.4 This
    pretense merits scant attention. Equally
    undeserving of serious consideration is its
    submission that the elevators were not
    damaged by the fire, against the report of
    The arson investigators of the INP and,
    indeed, its own expressed admission in its
    answer where it affirmed that the fire
    "damaged or destroyed a portion of the 7th
    floor of the insured building and more
    particularly a Hitachi elevator control panel."

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