NEW LIFE ENTERPRISES and JULIAN SY, petitioners, v. HON.

COURT OF APPEALS, EQUITABLE

INSURANCE COPORATION, RELIANCE SURETY AND INSURANCE CO., INC and WESTERN
GUARANTY CORPORATION, respondents,
G.R. No. 94071, March 31, 1992, Regalado, J.

The knowledge of such insurance by the insurer’s agents, even assuming the acquisition thereof by the former, is not the
“notice” that would estop the insurers from denying the claim. Besides, the theory of imputed knowledge, that is, the
knowledge of the agent is the knowledge of the principal, aside from being of dubious applicability here has likewise been
roundly refuted by respondent court whose factual finding we find acceptable.

FACTS:
Julian Sy and Jose Sy Bang insured their stocks in trade of their business New Life Enterprises with Western
Guaranty Corporation, Reliance Surety and Insurance Co., and Equitable Insurance Corporation, amounting to an
aggregate amount of P1.55 million.
When the building occupied by its business was gutted by fire sometime in 1982, Julian Sy went to the agent of
Reliance Insurance so that he can file his claim. In support thereof, he submitted the fire clearance, the insurance policies
and inventory of stocks.
Julian testified that the three companies are sister companies, thus when he went to Equitable Insurance, he was
told to go first to Reliance Insurance and said that they will only pay if the latter pays. Subsequently, Western Guaranty
told him that this claim is denied for breach of policy conditions.
Because of the denial of payment, the petitioners filed separate civil actions against the respondents.
RTC: Judgment in favor of petitioners.
CA: Reversed. Conditions No. 3 of the policies otherwise known as the other insurance clause states that the insured
shall give notice to the Company of any insurance or insurances already affected, or which they are subsequently be
effected.

Petitioner’s contention
The respective insurance policies issued by private respondents did not state or endorse thereon the other
insurance coverage. Further, the insurance agent knew about the existence of the additional insurance coverage and that
they were not informed about the requirement that such other additional insurance should be stated in the policy.

ISSUE:
Whether or not the knowledge of the insurance agent of the other insurances constitutes compliance with the
other insurance clause. (NO)

RULING:
NO. The knowledge of such insurance by the insurer’s agents, even assuming the acquisition thereof by the
former, is not the “notice” that would estop the insurers form denying the claim. The so-called theory of imputed
knowledge, aside from being of dubious applicability here has likewise been roundly refuted by respondent court whose
factual findings we find acceptable.
It may be true that the majority rule is that insured persons may accept policies without reading them, and that is
not negligence. But it is and was incumbent upon petitioners to read the insurance contracts, and this can be reasonable
expected of him considering that he has been a businessman since 1965.
Assuming arguendo that petitioners felt the legitimate need to be clarified as to the policy condition violated
there was a considerable lapse of time (8 months) from their receipt of the insurer’s clarificatory letter up to the time the
complaint was filed in court