Warranty Cases - Insurance Digests
Content
G.R. No. 138941 October 8, 2001 AMERICAN HOME ASSURANCE COMPANY ENTERPRISES, INC., Topic: Warranties Facts:
vs.
TANTUCO
No, AHA was incorrect. decision affirmed.
Petition
was
denied
and
Tantuco’s two oil mills were separately covered by fire insurance policies issued by American Home Assurance (AHA, insurer). The first was insured for P3M and the second for P6M. Premiums were full paid. The 2nd oil mill got burned. Tantuco immediately notified AHA of the incident. AHA sent its appraisers to inspect. AHA rejected Tantuco’s claim for the insurance proceeds. Tatuco sued AHA and won at the RTC. AHA appealed at CA, but the RTC decision was affirmed. Issue: AHA argued that the “Fire Extinguishing Appliances Warranty”1 was not followed. Tantuco should have installed internal fire hydrants inside the building. Is AHA correct? Held & Rationale:
1
The warranty did not require Tantuco to provide for all the fire extinguishing appliances enumerated. Additionally, it neither required that the appliances are restricted to those mentioned in the warranty. In other words, what the warranty mandates is that respondent should maintain in efficient working condition within the premises of the insured property, fire fighting equipments such as, but not limited to, those identified in the list, which will serve as the oil mill's first line of defense in case any part of it bursts into flame. Tantuco was able to comply with the warranty. Within the vicinity of the new oil mill can be found the following devices: numerous portable fire extinguishers, two fire hoses,21 fire hydrant, and an emergency fire engine. All of these equipments were in efficient working order when the fire occurred. Warranties are strictly construed against the insurer and should be reasonably interpreted. Reasonableness is found in the factual conditions prevailing in each case. Here, we find that there is no more need for an internal hydrant considering that inside the burned building were: (1) numerous portable fire extinguishers, (2) an emergency fire engine, and (3) a fire hose which has a connection to one of the external hydrants.
"WARRANTED that during the currency of this Policy, Fire Extinguishing Appliances as mentioned below shall be maintained in efficient working order on the premises to which insurance applies: PORTABLE EXTINGUISHERS INTERNAL HYDRANTS EXTERNAL HYDRANTS FIRE PUMP 24-HOUR SECURITY SERVICES BREACH of this warranty shall render this policy null and void and the Company shall no longer be liable for any loss which may occur."
G.R. No. L-33637 December 31, 1931
ANG GIOK CHIP vs. INSURANCE COMPANY Topic: Warranties Facts:
SPRINGFIELD
FIRE
&
MARINE
Ang Giok Chip (insured) doing business under the name Hua Bee Kong Si formerly owned a warehouse. Its contents were insured with 3 insurance companies (insurers) totalling P60K. One insurance policy, worth P10K was with Springfield. The warehouse was destroyed by fire. Springfield denied recovery for 4 reasons; one is the vilation of Warranty F. Warranty F fixed the amount of hazardous goods which might be stored in the insured building. CFI ruled for Ang. Springfiled appealed. Issue: Herridge, the the goods in was against Despite that, adjuster, found that 39 percent of the warehouse were hazardous. This Warranty F that only allowed 3% is Warranty F void?
This being true, we turn to two of such well recognized doctrines. First, it is well settled that a rider attached to a policy is a part of the contract. Second, it is well settled that an express warranty must appear upon the face of the policy, or be clearly incorporated therein and made a part thereof by explicit reference, or by words clearly evidencing such intention. Dissent: Imperial: Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it. An express warranty, then, made at or before the execution of the policy, like warranty F, is valid only if it is contained in the policy itself, or in another instrument signed by the insured and referred to in the policy as forming a part thereof. Warranty F may be seen that it does not form an integral part of the policy but appeal on another slip of paper pasted on the policy; it is therefore an instrument other than the policy and comes under the second paragraph provided for in section 65. And, according to this provision, warranty F cannot be valid or binding, for the simple reason that it is not signed by the insured, and has no weight, notwithstanding the fact that reference is made to it in a general way in the body of the policy
Held & Rationale: No, it’s valid. CFI decision overturned. The applicable law is found in the Instance Act, Act No. 2427, as amended, section 65 reading: "Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it."
G.R. No. L-4611 December 17, 1955
QUA CHEE GAN vs. LAW UNION AND ROCK INSURANCE Topic: Warranties Facts: Qua Chee Gan (Insured) had several fire insurance policies totalling P370,000, issued by the Law Union & Rock Insurance (Insurer). The policy covered bodegas and merchandise of the insured that were burned on June 21, 1940. Insurance Company resisted payment, claiming warranty violation, fraudulent claims, and arson. Counsel for the insurer acted as private prosecutor against Gan against the arson charge. But he was acquitted. Gan filed a civil suit to collect the insurance proceeds. CFI ruled for Gan. The defendant Insurance Company appealed directly to SC. Issue: Law Union alleged that 2 warranties were violated. Gan was prohibited from store gasoline in the insured premises. And he was to make sure there were hydrants. Should that warranties be interpreted against Gan? Held & Rationale: No, the wording was vague and ambigous. Also, Law Union was estopped. Violation of "Hemp Warranty" against the storage of gasoline: Gan had 36 cans (latas) of gasoline in "Bodega No. 2" that was a separate structure not affected by the fire. It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in the so-called "hemp warranty." The insurer speaks of "oils and is
decidedly ambiguous and uncertain. Usually, "Oils" mean "lubricants" and not gasoline or kerosene. And how many insured understand "flash point below 300o Fahrenheit.” We see no reason why to prohibit gasoline in the premises could not be expressed clearly and unmistakably, in the language and terms that the general public can readily understand. If the company intended to rely upon a condition of that character, it ought to have been plainly expressed in the policy. Also Law Union is barred by estoppel to claim violation of the so-called fire hydrants warranty. It knew that the number of hydrants demanded never existed from the very beginning. But Law Union still issued the policies in question subject to such warranty, and received the corresponding premiums. It would be fraud upon the insured to allow insurer to claims now as void ab initio the policies that it had issued to the plaintiff without warning of their fatal defect, of which it was informed, and after it had misled the defendant into believing that the policies were effective. The insurance company was aware, even before the policies were issued, that in the premises insured there were only two fire hydrants installed by Qua Chee Gan and two others nearby, owned by the municipality of Tabaco, contrary to the requirements of the warranty in question.
G.R. No. L-36232
December 19, 1974
PIONEER INSURANCE AND SURETY CORPORATION vs. OLIVA YAP, represented by her attorney-in-fact, CHUA SOON POON Topic: Warranties Facts: Yap (insured) took out Fire Insurance Policy No. 4216 from Pioneer (insurer) worth P25K. The policy required that Pioneer be informed if the property is under another insurer. Failure to do so would forfeit the policy. Yap obtained another insurance policy worth P20K from Great American Insurance covering the same properties. Pioneer was notified. Yap took out another fire insurance policy for P20K covering the same properties from Federal Insurance. But this was procured without notice to and the written consent of Pioneer Insurance thus, was not noted as a co-insurance in Policy No. 4219. Yap’s store burned. Pioneer denied to indemnify. Litigation ensued. Issue: Is Pioneer liable to pay the Fire Insurance Policy on despite Yap’s violation of the co-insurance clause? Held & Rationale: No, Pioneer is not liable to pay Yap. Oliva Yap violated the co-insurance clause that resulted in the avoidance of Pioneer’s liability. Yap cites Gonzales La O vs. Yek Tong Lin Fire and Marine Insurance Co., Ltd. to justify the
assumption but in that case, unlike here, there was knowledge by the insurer of violations of the contract, to wit: "If, with the knowledge of the existence of other insurances which the defendant deemed violations of the contract, it has preferred to continue the policy, its action amounts to a waiver of the annulment of the contract ..." A waiver must be express. If it is to be implied from conduct mainly, said conduct must be clearly indicative of a clear intent to waive such right. Especially in the case at bar where petitioner is assumed to have waived a valuable right, nothing less than a clear, positive waiver, made with full knowledge of the circumstances, must be required. By the plain terms of the policy, other insurance without the consent of petitioner would ipso facto avoid the contract. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract, wherever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance.
Disclaimer: Difficult Case! G.R. No. 151890 June 20, 2006
PRUDENTIAL GUARANTEE vs. TRANS-ASIA G.R. No. 151991 June 20, 2006 TRANS-ASIA vs.PRUDENTIAL GUARANTEE Topic: Warranties Facts: TRANS-ASIA (insured) owned the vessel M/V Asia Korea. PRUDENTIAL (insurer) insured M/V Asia Korea for loss/damage of the hull and machinery arising from perils, inter alia, of fire and explosion for the sum of P40M. Policy began from July 1, 1993 up to July 1, 1994. While the policy was in force, a fire broke out while [M/V Asia Korea was] undergoing repairs at the port of Cebu. [TRANSASIA] filed its notice of claim for damage sustained by the vessel. [TRANS-ASIA] reserved its right to subsequently notify [PRUDENTIAL] as to the full amount of the claim upon final survey and determination by average adjuster Richard Hogg of the damage sustained. [PRUDENTIAL] denied plaintiff’s claim the ground was breach of warranty. The warranty concerned was about vessel class and class maintainace. Litigation ensued. RTC ruled for Prudential. CA reversed. Issue: Was there a breach of warranty? Held & Rationale: No, but not for the lack of breach. Prudential failed to prove the breach. Rather,
PRUDENTIAL, which claimed that TRANS-ASIA breached the warranty in the policy, has the burden of proving such. PRUDENTIAL had to show proof in support of its defense; otherwise, failing to failing that, it remains self-serving. Clearly, if no evidence on the alleged breach of TRANS-ASIA of the subject warranty is shown, a fortiori, TRANSASIA would be successful in claiming on the policy. It follows that PRUDENTIAL bears the burden of evidence to establish the fact of breach. As it is undisputed that TRANS-ASIA was properly classed at the time the contract of insurance was entered into, thus, it becomes incumbent upon PRUDENTIAL to show evidence that the status of TRANS-ASIA as being properly CLASSED by Bureau Veritas had shifted in violation of the warranty. Unfortunately, PRUDENTIAL failed to support the allegation. We are in accord with the ruling of the Court of Appeals that the lack of a certification in PRUDENTIAL’s records to the effect that TRANSASIA’s "M/V Asia Korea" was CLASSED AND CLASS MAINTAINED at the time of the occurrence of the fire cannot be tantamount to the conclusion that TRANS-ASIA in fact breached the warranty contained in the policy. We are not unmindful of the clear language of Sec. 74 of the Insurance Code which provides that, "the violation of a material warranty, or other material provision of a policy on the part of either party thereto, entitles the other to rescind." It is generally accepted that "[a] warranty is a statement or promise set forth in the policy, or by reference incorporated therein, the untruth or non-fulfillment of which in any respect, and without reference to whether the insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy voidable by
the insurer." However, it is similarly indubitable that for the breach of a warranty to avoid a policy, the same must be duly shown by the party alleging the same. We cannot sustain an allegation that is unfounded. Consequently, PRUDENTIAL, not having shown that TRANS-ASIA breached the warranty condition, CLASSED AND CLASS MAINTAINED, it remains that TRANS-ASIA must be allowed to recover its rightful claims on the policy. And even if TRANS-ASIA violated the policy condition on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED, PRUDENTIAL made a valid waiver. We do not find that the Court of Appeals was in error when it held that PRUDENTIAL, in renewing TRANS-ASIA’s insurance policy for two consecutive years after the loss covered by Policy No. MH93/1363, was considered to have waived TRANSASIA’s breach of the subject warranty, if any. Breach of a warranty or of a condition renders the contract defeasible at the option of the insurer; but if he so elects, he may waive his privilege and power to rescind by the mere expression of an intention so to do. In that event his liability under the policy continues as before.28 There can be no clearer intention of the waiver of the alleged breach than the renewal of the policy insurance granted by PRUDENTIAL to TRANS-ASIA in MH94/1595 and MH95/1788, issued in the years 1994 and 1995, respectively. To our mind, the argument is made even more credulous by PRUDENTIAL’s lack of proof to support its allegation that the renewals of the policies were taken only after a request was made to TRANSASIA to furnish them a copy of the certificate attesting that "M/V Asia Korea" was CLASSED AND CLASS MAINTAINED. Notwithstanding PRUDENTIAL’s claim that no certification was issued to that effect, it renewed the policy, thereby, evidencing
an intention to waive TRANS-ASIA’s alleged breach. Clearly, by granting the renewal policies twice and successively after the loss, the intent was to benefit the insured, TRANS-ASIA, as well as to waive compliance of the warranty. The foregoing finding renders a determination of whether the subject warranty is a rider, moot, as raised by the PRUDENTIAL in its assignment of errors. Whether it is a rider will not effectively alter the result for the reasons that: (1) PRUDENTIAL was not able to discharge the burden of evidence to show that TRANS-ASIA committed a breach, thereof; and (2) assuming arguendo the commission of a breach by TRANS-ASIA, the same was shown to have been waived by PRUDENTIAL.
vs.
TANTUCO
No, AHA was incorrect. decision affirmed.
Petition
was
denied
and
Tantuco’s two oil mills were separately covered by fire insurance policies issued by American Home Assurance (AHA, insurer). The first was insured for P3M and the second for P6M. Premiums were full paid. The 2nd oil mill got burned. Tantuco immediately notified AHA of the incident. AHA sent its appraisers to inspect. AHA rejected Tantuco’s claim for the insurance proceeds. Tatuco sued AHA and won at the RTC. AHA appealed at CA, but the RTC decision was affirmed. Issue: AHA argued that the “Fire Extinguishing Appliances Warranty”1 was not followed. Tantuco should have installed internal fire hydrants inside the building. Is AHA correct? Held & Rationale:
1
The warranty did not require Tantuco to provide for all the fire extinguishing appliances enumerated. Additionally, it neither required that the appliances are restricted to those mentioned in the warranty. In other words, what the warranty mandates is that respondent should maintain in efficient working condition within the premises of the insured property, fire fighting equipments such as, but not limited to, those identified in the list, which will serve as the oil mill's first line of defense in case any part of it bursts into flame. Tantuco was able to comply with the warranty. Within the vicinity of the new oil mill can be found the following devices: numerous portable fire extinguishers, two fire hoses,21 fire hydrant, and an emergency fire engine. All of these equipments were in efficient working order when the fire occurred. Warranties are strictly construed against the insurer and should be reasonably interpreted. Reasonableness is found in the factual conditions prevailing in each case. Here, we find that there is no more need for an internal hydrant considering that inside the burned building were: (1) numerous portable fire extinguishers, (2) an emergency fire engine, and (3) a fire hose which has a connection to one of the external hydrants.
"WARRANTED that during the currency of this Policy, Fire Extinguishing Appliances as mentioned below shall be maintained in efficient working order on the premises to which insurance applies: PORTABLE EXTINGUISHERS INTERNAL HYDRANTS EXTERNAL HYDRANTS FIRE PUMP 24-HOUR SECURITY SERVICES BREACH of this warranty shall render this policy null and void and the Company shall no longer be liable for any loss which may occur."
G.R. No. L-33637 December 31, 1931
ANG GIOK CHIP vs. INSURANCE COMPANY Topic: Warranties Facts:
SPRINGFIELD
FIRE
&
MARINE
Ang Giok Chip (insured) doing business under the name Hua Bee Kong Si formerly owned a warehouse. Its contents were insured with 3 insurance companies (insurers) totalling P60K. One insurance policy, worth P10K was with Springfield. The warehouse was destroyed by fire. Springfield denied recovery for 4 reasons; one is the vilation of Warranty F. Warranty F fixed the amount of hazardous goods which might be stored in the insured building. CFI ruled for Ang. Springfiled appealed. Issue: Herridge, the the goods in was against Despite that, adjuster, found that 39 percent of the warehouse were hazardous. This Warranty F that only allowed 3% is Warranty F void?
This being true, we turn to two of such well recognized doctrines. First, it is well settled that a rider attached to a policy is a part of the contract. Second, it is well settled that an express warranty must appear upon the face of the policy, or be clearly incorporated therein and made a part thereof by explicit reference, or by words clearly evidencing such intention. Dissent: Imperial: Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it. An express warranty, then, made at or before the execution of the policy, like warranty F, is valid only if it is contained in the policy itself, or in another instrument signed by the insured and referred to in the policy as forming a part thereof. Warranty F may be seen that it does not form an integral part of the policy but appeal on another slip of paper pasted on the policy; it is therefore an instrument other than the policy and comes under the second paragraph provided for in section 65. And, according to this provision, warranty F cannot be valid or binding, for the simple reason that it is not signed by the insured, and has no weight, notwithstanding the fact that reference is made to it in a general way in the body of the policy
Held & Rationale: No, it’s valid. CFI decision overturned. The applicable law is found in the Instance Act, Act No. 2427, as amended, section 65 reading: "Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it."
G.R. No. L-4611 December 17, 1955
QUA CHEE GAN vs. LAW UNION AND ROCK INSURANCE Topic: Warranties Facts: Qua Chee Gan (Insured) had several fire insurance policies totalling P370,000, issued by the Law Union & Rock Insurance (Insurer). The policy covered bodegas and merchandise of the insured that were burned on June 21, 1940. Insurance Company resisted payment, claiming warranty violation, fraudulent claims, and arson. Counsel for the insurer acted as private prosecutor against Gan against the arson charge. But he was acquitted. Gan filed a civil suit to collect the insurance proceeds. CFI ruled for Gan. The defendant Insurance Company appealed directly to SC. Issue: Law Union alleged that 2 warranties were violated. Gan was prohibited from store gasoline in the insured premises. And he was to make sure there were hydrants. Should that warranties be interpreted against Gan? Held & Rationale: No, the wording was vague and ambigous. Also, Law Union was estopped. Violation of "Hemp Warranty" against the storage of gasoline: Gan had 36 cans (latas) of gasoline in "Bodega No. 2" that was a separate structure not affected by the fire. It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in the so-called "hemp warranty." The insurer speaks of "oils and is
decidedly ambiguous and uncertain. Usually, "Oils" mean "lubricants" and not gasoline or kerosene. And how many insured understand "flash point below 300o Fahrenheit.” We see no reason why to prohibit gasoline in the premises could not be expressed clearly and unmistakably, in the language and terms that the general public can readily understand. If the company intended to rely upon a condition of that character, it ought to have been plainly expressed in the policy. Also Law Union is barred by estoppel to claim violation of the so-called fire hydrants warranty. It knew that the number of hydrants demanded never existed from the very beginning. But Law Union still issued the policies in question subject to such warranty, and received the corresponding premiums. It would be fraud upon the insured to allow insurer to claims now as void ab initio the policies that it had issued to the plaintiff without warning of their fatal defect, of which it was informed, and after it had misled the defendant into believing that the policies were effective. The insurance company was aware, even before the policies were issued, that in the premises insured there were only two fire hydrants installed by Qua Chee Gan and two others nearby, owned by the municipality of Tabaco, contrary to the requirements of the warranty in question.
G.R. No. L-36232
December 19, 1974
PIONEER INSURANCE AND SURETY CORPORATION vs. OLIVA YAP, represented by her attorney-in-fact, CHUA SOON POON Topic: Warranties Facts: Yap (insured) took out Fire Insurance Policy No. 4216 from Pioneer (insurer) worth P25K. The policy required that Pioneer be informed if the property is under another insurer. Failure to do so would forfeit the policy. Yap obtained another insurance policy worth P20K from Great American Insurance covering the same properties. Pioneer was notified. Yap took out another fire insurance policy for P20K covering the same properties from Federal Insurance. But this was procured without notice to and the written consent of Pioneer Insurance thus, was not noted as a co-insurance in Policy No. 4219. Yap’s store burned. Pioneer denied to indemnify. Litigation ensued. Issue: Is Pioneer liable to pay the Fire Insurance Policy on despite Yap’s violation of the co-insurance clause? Held & Rationale: No, Pioneer is not liable to pay Yap. Oliva Yap violated the co-insurance clause that resulted in the avoidance of Pioneer’s liability. Yap cites Gonzales La O vs. Yek Tong Lin Fire and Marine Insurance Co., Ltd. to justify the
assumption but in that case, unlike here, there was knowledge by the insurer of violations of the contract, to wit: "If, with the knowledge of the existence of other insurances which the defendant deemed violations of the contract, it has preferred to continue the policy, its action amounts to a waiver of the annulment of the contract ..." A waiver must be express. If it is to be implied from conduct mainly, said conduct must be clearly indicative of a clear intent to waive such right. Especially in the case at bar where petitioner is assumed to have waived a valuable right, nothing less than a clear, positive waiver, made with full knowledge of the circumstances, must be required. By the plain terms of the policy, other insurance without the consent of petitioner would ipso facto avoid the contract. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract, wherever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance.
Disclaimer: Difficult Case! G.R. No. 151890 June 20, 2006
PRUDENTIAL GUARANTEE vs. TRANS-ASIA G.R. No. 151991 June 20, 2006 TRANS-ASIA vs.PRUDENTIAL GUARANTEE Topic: Warranties Facts: TRANS-ASIA (insured) owned the vessel M/V Asia Korea. PRUDENTIAL (insurer) insured M/V Asia Korea for loss/damage of the hull and machinery arising from perils, inter alia, of fire and explosion for the sum of P40M. Policy began from July 1, 1993 up to July 1, 1994. While the policy was in force, a fire broke out while [M/V Asia Korea was] undergoing repairs at the port of Cebu. [TRANSASIA] filed its notice of claim for damage sustained by the vessel. [TRANS-ASIA] reserved its right to subsequently notify [PRUDENTIAL] as to the full amount of the claim upon final survey and determination by average adjuster Richard Hogg of the damage sustained. [PRUDENTIAL] denied plaintiff’s claim the ground was breach of warranty. The warranty concerned was about vessel class and class maintainace. Litigation ensued. RTC ruled for Prudential. CA reversed. Issue: Was there a breach of warranty? Held & Rationale: No, but not for the lack of breach. Prudential failed to prove the breach. Rather,
PRUDENTIAL, which claimed that TRANS-ASIA breached the warranty in the policy, has the burden of proving such. PRUDENTIAL had to show proof in support of its defense; otherwise, failing to failing that, it remains self-serving. Clearly, if no evidence on the alleged breach of TRANS-ASIA of the subject warranty is shown, a fortiori, TRANSASIA would be successful in claiming on the policy. It follows that PRUDENTIAL bears the burden of evidence to establish the fact of breach. As it is undisputed that TRANS-ASIA was properly classed at the time the contract of insurance was entered into, thus, it becomes incumbent upon PRUDENTIAL to show evidence that the status of TRANS-ASIA as being properly CLASSED by Bureau Veritas had shifted in violation of the warranty. Unfortunately, PRUDENTIAL failed to support the allegation. We are in accord with the ruling of the Court of Appeals that the lack of a certification in PRUDENTIAL’s records to the effect that TRANSASIA’s "M/V Asia Korea" was CLASSED AND CLASS MAINTAINED at the time of the occurrence of the fire cannot be tantamount to the conclusion that TRANS-ASIA in fact breached the warranty contained in the policy. We are not unmindful of the clear language of Sec. 74 of the Insurance Code which provides that, "the violation of a material warranty, or other material provision of a policy on the part of either party thereto, entitles the other to rescind." It is generally accepted that "[a] warranty is a statement or promise set forth in the policy, or by reference incorporated therein, the untruth or non-fulfillment of which in any respect, and without reference to whether the insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy voidable by
the insurer." However, it is similarly indubitable that for the breach of a warranty to avoid a policy, the same must be duly shown by the party alleging the same. We cannot sustain an allegation that is unfounded. Consequently, PRUDENTIAL, not having shown that TRANS-ASIA breached the warranty condition, CLASSED AND CLASS MAINTAINED, it remains that TRANS-ASIA must be allowed to recover its rightful claims on the policy. And even if TRANS-ASIA violated the policy condition on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED, PRUDENTIAL made a valid waiver. We do not find that the Court of Appeals was in error when it held that PRUDENTIAL, in renewing TRANS-ASIA’s insurance policy for two consecutive years after the loss covered by Policy No. MH93/1363, was considered to have waived TRANSASIA’s breach of the subject warranty, if any. Breach of a warranty or of a condition renders the contract defeasible at the option of the insurer; but if he so elects, he may waive his privilege and power to rescind by the mere expression of an intention so to do. In that event his liability under the policy continues as before.28 There can be no clearer intention of the waiver of the alleged breach than the renewal of the policy insurance granted by PRUDENTIAL to TRANS-ASIA in MH94/1595 and MH95/1788, issued in the years 1994 and 1995, respectively. To our mind, the argument is made even more credulous by PRUDENTIAL’s lack of proof to support its allegation that the renewals of the policies were taken only after a request was made to TRANSASIA to furnish them a copy of the certificate attesting that "M/V Asia Korea" was CLASSED AND CLASS MAINTAINED. Notwithstanding PRUDENTIAL’s claim that no certification was issued to that effect, it renewed the policy, thereby, evidencing
an intention to waive TRANS-ASIA’s alleged breach. Clearly, by granting the renewal policies twice and successively after the loss, the intent was to benefit the insured, TRANS-ASIA, as well as to waive compliance of the warranty. The foregoing finding renders a determination of whether the subject warranty is a rider, moot, as raised by the PRUDENTIAL in its assignment of errors. Whether it is a rider will not effectively alter the result for the reasons that: (1) PRUDENTIAL was not able to discharge the burden of evidence to show that TRANS-ASIA committed a breach, thereof; and (2) assuming arguendo the commission of a breach by TRANS-ASIA, the same was shown to have been waived by PRUDENTIAL.
