Pioneer Insurance & Surety Corp. v. Yap; 61 SCRA 426 (1974)


Respondent Oliva Yap was the owner of a store in a two- storey building located at No. 856 Juan Luna Street, Manila, where in 1962 she sold shopping bags and footwear, such as shoes, sandals and step-ins. Chua Soon Poon, Oliva Yap’s son-in-law, was in charge of the store. 

On April 19, 1962, Yap took out Fire Insurance Policy No. 4216 from  Pioneer Insurance & Surety Corporation with a face value of P25,000.00 covering her stocks, office furniture, fixtures and fittings of every kind and description. At the time of the insurance on April 19, 1962 of Policy No. 4219 in favor of respondent Yap, an insurance policy for P20,000.00 issued by the Great American Insurance Company covering the same properties was noted on said policy as co-insurance. Still, Oliva Yap took out another fire insurance policy for P20,000.00 covering the same properties, this time from the Federal Insurance Company, Inc., which new policy was, however, procured without notice to and the written consent of petitioner Pioneer Insurance & Surety Corporation and, therefore, was not noted as a co-insurance in Policy No. 4219. 

In the policy, it was stipulated that the Insured shall give notice to the Company of any insurance or insurances already effected, or which may subsequently be effected, covering any of the property hereby insured, and 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

Thereafter, a fire broke out in the building housing of Yap’s store, and the said store was burned. She Yap filed an insurance claim, but the same was denied in Pioneer’s letter on the ground of “breach and/or violation of any and/or all terms and conditions of Policy No. 4219. Thus, Yap filed an action before the RTC.

Petitioner alleged that no property belonging to plaintiff Yap and covered by the insurance policy was destroyed by the fire; that Yap’s claim was filed out of time; and that Yap took out an insurance policy from another insurance company without petitioner’s knowledge and/or endorsement, in violation of the express stipulations in Policy No. 4219, hence, all benefits accruing from the policy were deemed forfeited.

RTC ruled in favor of Yap and was affirmed by the CA. Hence, this petition.


Whether Pioneer should be absolved from liability on Fire Insurance Policy No. 4219 on account of any violation by Yap of the co-insurance clause therein.


Yes. There was a violation by respondent Oliva Yap of the co- insurance clause contained in Policy No. 4219 that resulted in the avoidance of Pioneer’s liability. The insurance policy for P20,000.00 issued by the Great American Insurance Company covering the same properties of Yap and duly noted on Policy No. 4219 as co-insurance, ceased, by agreement of the parties to be recognized by them as a co-insurance policy. The CA says that the Great American Insurance policy was substituted by the Federal Insurance policy for the same amount, and because it was a mere case of substitution, there was no necessity for its endorsement on Policy No. 4219. This finding, as well as reasoning, suffers from several flaws. There is no evidence to establish and prove such a substitution. If anything was substituted for the Great American Insurance policy, it could only be the Northwest Insurance policy for the same amount of P20,000.00. 

The purpose of the terms of the policy which required the insured to declare other insurances is to prevent over-insurance and thus avert the perpetration of fraud. The public, as well as the insurer, is interested in preventing the situation in which a fire would be profitable to the insured. According to Justice Story: “The insured has no right to complain, for he assents to comply with all the stipulation on his side, in order to entitle himself to the benefit of the contract, which, upon reason or principle, he has no right to ask the court to dispense with the performance of his own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulations, would not have been entered into.”

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