Pioneer v Yap G.R. No. L-36232 December 19, 1974

J. Fernandez

Facts:

Respondent Oliva Yap was the owner of a store in a two-storey building where she sold shopping bags and footwear. Chua Soon Poon, her son-in-law, was in charge of the store.

Yap took out a Fire Insurance Policy No. 4216 from Pioneer Insurance with a value of P25,000.00 covering her stocks, office furniture, fixtures and fittings.

Among the conditions in the policy executed by the parties are the following:

unless such notice be given and the particulars of such insurance or insurances be stated in, or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this Policy shall be forfeited… Any false declaration or breach or this condition will render this policy null and void.

Another insurance policy for P20,000.00 issued by Great American covering the same properties. The endorsement recognized co-insurance by Northwest for the same value.

Oliva Yap took out another fire insurance policy for P20,000.00 covering the same properties from the Federal Insurance Company, Inc., which was procured without notice to and the written consent of Pioneer.

A fire broke out in the building, and the store was burned. Yap filed an insurance claim, but the same was denied for a breach.

Oliva Yap filed a case for payment of the face value of her fire insurance policy. The insurance company refused to pay because she never informed Pioneer of another insurer. The trial court decided in favor of Yap. The CA affirmed.

Issue:

Whether or not petitioner should be absolved from liability on the Pioneeer policy on account of any violation of the co-insurance clause

Held: No. Petition dismissed.

Ratio:

There was a violation. The insurance policy for P20,000.00 issued by the Great American, ceased to be recognized by them as a co-insurance policy.

The endorsement shows the clear intention of the parties to recognize on the date the endorsement was made, the existence of only one co-insurance, the Northwest one. The finding of the Court of Appeals that the Great American Insurance policy was substituted by the Federal Insurance policy is indeed contrary to said stipulation.

Other insurance without the consent of Pioneer would 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.

The validity of a clause in a fire insurance policy to the effect that the procurement of additional insurance without the consent of the insurer renders the policy void is in American jurisprudence.

Milwaukee Mechanids' Lumber Co., vs. Gibson- "The rule in this state and practically all of the states is to the effect that a clause in a policy to the effect that the procurement of additional insurance without the consent of the insurer renders the policy void is a valid provision.”

In this jurisdiction, General Insurance & Surety Corporation vs. Ng Hua- “The annotation then, must be deemed to be a warranty that the property was not insured by any other policy. Violation thereof entitled the insurer to rescind. Furthermore, even if the annotations were overlooked the defendant insurer would still be free from liability because there is no question that the policy issued by General Indemnity has not been stated in nor endorsed on Policy No. 471 of defendant. The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud where a fire would be profitable to the insured.“