G.R. No. L-1559; January 31, 1950
FILIPINAS COMPAÑIA DE SEGUROS, petitioner, vs. TAN CHUACO, respondent.

FACTS

Respondent Tan Chuaco owned a building insured by petitioner Filipinas Compañia de Seguros under two fire insurance policies totaling P30,000. The building was completely destroyed by fire on January 5, 1942, during the policy term. After the insurer refused to pay despite due notice and proof of loss, Tan Chuaco filed an action to recover on the policies. The trial court ruled in favor of Tan Chuaco, and the Court of Appeals affirmed the judgment. The insurer filed this petition for certiorari, raising three defenses: (1) the insurance ceased to attach when Japanese forces sealed the building on December 28, 1941, as this allegedly changed the nature of its occupation and increased the risk of loss under the policy terms; (2) the fire, though accidental, could have been remotely contributed to by the abnormal war conditions, which under the policy required the insured to prove the loss happened independently of such conditions; and (3) the insured made a fraudulent declaration in his claim by denying any previous fire in premises he was interested in, which he later admitted at trial, thus forfeiting benefits under the policy.

ISSUE

1. Did the sealing of the building by Japanese forces increase the risk of loss, causing the insurance to cease under the policy?
2. Was the insured required to prove the fire was not remotely contributed to by the abnormal war conditions to recover?
3. Did the insured’s alleged fraudulent declaration in his claim forfeit his right to recover?

RULING

The Supreme Court dismissed the petition, affirming the Court of Appeals’ decision.
1. On the sealing of the building: The Court found no increase in risk. The evidence showed the building was sealed because it was closed, to prevent looting, not because it contained war materials. The theater of war operations had shifted to Bataan and Corregidor; there was no danger from USAFFE forces, guerrillas (as they organized later), or saboteurs in Lucena at the time. Thus, the insurance did not cease.
2. On the cause of the fire: Following the rule that insurance policy terms are construed strictly against the insurer, the clause excluding loss during invasions or military power was interpreted to mean the policy covered fire occurring during such events if not occasioned by them. The inferential finding that the fire was accidental sufficed; the insurer’s argument that the insured must prove the fire was not remotely contributed to by abnormal conditions was rejected. The factual determination that the loss was independent of the war conditions was upheld.
3. On the alleged fraudulent declaration: The Court found no fraud. The insured’s denial of a previous fire referred to the insured building itself, not to other premises. His admission at trial about a prior fire in another building he was interested in did not constitute a fraudulent claim under the policy.
Costs were awarded against the petitioner.

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