G.R. No. L-5715
E. M. BACHRACH, plaintiff-appellee, vs. BRITISH AMERICAN ASSURANCE COMPANY, a corporation, defendant-appellant.
December 20, 1910

FACTS:
E. M. Bachrach (plaintiff) obtained a fire insurance policy from British American Assurance Company (defendant) for P10,000 covering goods in his general furniture store, including a “Calalac” automobile for P1,250, stored at No. 16 Calle Martinez, Manila. The policy permitted the use of gasoline not exceeding 10 gallons in the automobile’s reservoir, with a warranty that the car would not be filled or emptied in the building.

On April 18, 1908, a fire occurred, damaging the insured property. Bachrach filed a claim for P9,841.50 (after deducting salvage). The defendant denied liability, raising several defenses: (1) Bachrach maintained a paint and varnish shop in the building, increasing the risk; (2) he transferred interest in the property without the insurer’s sanction; (3) he willfully caused the fire by placing a gasoline can and a lighted lamp near the goods, greatly increasing the risk; and (4) he failed to make proof of loss within the required time and did not file a statement with the municipal judge as per policy conditions and Article 404 of the Code of Commerce.

Bachrach countered that he had been acquitted of arson in a criminal case related to the same incident, and that the defendant had waived the requirement for proof of loss by immediately denying liability and declaring the policy null and void after receiving notice of the loss. The lower court ruled in favor of Bachrach, holding the defendant liable. The defendant appealed, reiterating its defenses.

ISSUE:
I. Whether the plaintiff’s alleged act of willful incendiarism released the insurer from liability.
II. Whether the insurer waived the requirements for notice and proof of loss and other statements from the insured.
III. Whether the defendant was entitled to the full value of the automobile from the salvage, not just a pro-rated share.

RULING:
I. No. The Supreme Court found no preponderance of evidence showing that the plaintiff actually set fire to the goods. It noted the plaintiff’s acquittal in a criminal arson case for the same incident, where the evidence was deemed insufficient to prove guilt beyond a reasonable doubt. The Court stated that to establish the defense of incendiarism in a civil case, the evidence should not be materially less convincing than that required to convict in a criminal case, and thus declined to set aside the findings of the judge and assessors in the criminal cause.

II. Yes. The Court held that the defendant waived the requirements for notice and proof of loss and the submission of books/papers/statements to a municipal judge. The insurer’s immediate denial of liability by declaring the policy “null and void” after receiving notice of loss rendered the furnishing of such notice and proof vain and useless. The Court cited established jurisprudence that a denial of liability on other grounds waives these requirements. Additionally, the Court noted that the policy itself did not explicitly require such a notice, and the specific official “juez municipal” (municipal judge) no longer existed, making compliance difficult.

III. No. The Court ruled that the defendant’s claim to the full value of the automobile from salvage was raised too late. The defendant made no objection in the lower court when the P4,000 salvage (including the automobile) was distributed proportionally among all the insurers. Having allowed other insurers to share in the salvage without objection, it was too late to raise the issue on appeal for the first time.

For these reasons, the Supreme Court affirmed the judgment of the lower court, ordering the defendant to pay the plaintiff P9,841.50 with interest at 6% from July 13, 1908, plus costs.