EAST FURNITURE INC. vs. GLOBE & RUTGERS FIRE INSURANCE CO.

OF
NEW YORK
FACTS:
On March 2, 1929, a fire broke out in plaintiff's establishment, as a
result of which the insured articles therein found were destroyed by the
fire, within the period marked in the policies the plaintiff presented to
the insurance companies an inventory of the insured furniture which
was destroyed by the fire, the value of which, before or at the time of
the fire, amounted to P52,061.99. Three actions were instituted in the
Court of First Instance of Manila on March 25, 1929, to recover the full
amount of three fire insurance police aggregating P20,000.
The defendants interposed a general denial and as special defenses
alleged in substance (1) that the fire in question was of intentional
origin; and (2) that the claims of loss presented by the plaintiff were
false and fraudulent. After the trial, the lower court found that the
claims presented by the plaintiff were notoriously fraudulent, and,
accordingly, sustained defendant's second special defense and
dismissed the complaint in each of the three cases, with costs against
the plaintiff.
ISSUE:
Should the special defense of non-recovery on the policy due to wilful
acts of the insured be sustained?
HELD:
Yes. It appears from the record that at the time of the fire the plaintiff
was heavily indebted to the Manila Finance & Discount Corporation, to
the Bank of the Philippine Islands, and to Attorney Alfonso E. Mendoza.
This thus led to the conclusion that defendants' first special defense is
well founded that the fire in question was of intentional origin and
was caused with the connivance of the plaintiff. Neither the interest of
the justice nor public policy would be promoted by an omission of the
courts to expose and condemn incendiarism once the same is
established by competent evidence. It would tend to encourage rather
than suppress that great public menace if the courts do not expose the
crime to public condemnation when the evidence in a case like the
present shows that it has really been committed.
Condition 12 of each of the insurance policies sued upon provides that
"if the claim be in any respect fraudulent, or if any false declaration be
made or used in support thereof, or if any fraudulent means or devices
are used by the Insured or anyone acting on his behalf to obtain any

benefit under this policy; or, if the loss or damage be occasioned by

the wilful act, or with the connivance of the Insured, all benefit
under this policy shall be forfeited."