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.

Insurance Code Ambiguity Contract of Adherence
Qua Chee Gan owns four warehouses in Albay. He was using these warehouses to house crops like
copra and hemp. All warehouses were insured by Law Union and Rock Insurance for the amount of
P370,000.00. The insurance states that Qua Chee Gan should install 11 hydrants in the warehouses
premises. Qua Chee Gan installed only two, but Law Union nevertheless went on with the insurance
policy and collected premium from Qua Chee Gan. The insurance contract also provides that oil
should not be stored within the premises of the warehouses.
In 1940, three of the warehouses were destroyed by fire. The damage caused amounted to P398k.
Qua Chee Gan demanded insurance pay from Law Union but the latter refused as it alleged that
after investigation from their part, they found out that Qua Chee Gan caused the fire. Law Union in
fact sued Qua Chee Gan for Arson.
Qua Chee Gan was acquitted in the arson case. He then demanded that Law Union pay up. This time,
Law Union averred that the insurance contract is void because Qua Chee Gan failed to install 11
hydrants; and that gasoline was found in one of the warehouses.
ISSUE: Whether or not the insurance contract is void.
HELD: No. Law Union cannot exempt itself from paying Qua Chee Gan because it is estopped from
invoking the same. It is a well settled rule of law that an insurer which with knowledge of facts
entitling it to treat a policy as no longer in force, receives and accepts a premium on the policy,
estopped to take advantage of the forfeiture.
Also, gasoline is not one of those items specifically prohibited from the premises of the warehouses.
What was mentioned was the word oil which could mean anything (from palm oil to lubricant and
not gasoline or kerosene). This ambiguity is to be interpreted against Law Union because a contract
of insurance is a contract of adhesion. Further, oil is incidental to Qua Chee Gans business, it being
used for motor fuel.

Fieldmen's Insurance v. vda. de Songco

FIELDMENS INSURANCE v. MERCEDES VARGAS vda. DE SONGCO, et al. and CA
1968 / Fernando / Review of CA decision

Federico Songco, a man of scant education [first grader], owned a private jeepney. He was induced
by Fieldmens Insurance agent Benjamin Sambat to apply for a Common Carriers Liability Insurance
Policy covering his motor vehicle. [As testified by Songcos son Amor later,] Federico said that his
vehicle is an owner private vehicle and not for passengers, but agent Sambat said that they can
insure whatever kind of vehicle because their company is not owned by the government, so they
could do what they please whenever they believe a vehicle is insurable. Songco paid an annual
premium and he was issued a Common Carriers Accident Insurance Policy. After the policy expired,
he renewed the policy. During the effectivity of the renewed policy, the insured vehicle while being
driven by Rodolfo Songco [duly licensed driver and Federicos son] collided with a car. As a result,
Federico and Rodolfo died, while Carlos (another son) and his wife Angelita, and a family friend
sustained physical injuries.
The lower court held that Fieldmens Insurance cannot escape liability under a common
carrier insurance policy on the pretext that what was insured was a private vehicle and not a
common carrier, the policy being issued upon the agents insistence. CA affirmed the lower court.

CA DECISION AFFIRMED; FIELDMENS INSURANCE IS LIABLE

From Qua Chee Gan v. Law Union and Rock Insurance Where inequitable conduct is shown by an
insurance firm, it is estopped from enforcing forfeitures in its favor, in order to forestall fraud or
imposition on the insured. Estoppel is primarily based on the doctrine of good faith and the
avoidance of harm that will befall the innocent party due to its injurious reliance.

Fieldmens Insurance incurred legal liability under the policy. Since some of the conditions in the
policy were impossible to comply with under the existing conditions at the time and inconsistent
with the known facts, the insurer is estopped from asserting breach of such conditions. Except for
the fact that the passengers were not fare-paying, their status as beneficiaries under the policy is
recognized. Even if the be assumed that there was an ambiguity, such must be strictly interpreted
against the party that caused them.

The contract of insurance is one of perfect good faith (uberrima fides) not for the insured alone,
but equally so for the insurer; in fact, it is more so for the latter, since its dominant bargaining
position carries with it stricter responsibility.

Young vs Midland Textile Insurance Co.
March 31, 1915Insurance: warranty
(Insurance)
Plaintiff
: Young
Defendant
: Midland Textile Insurance Company.
Ponente
: Johnson
FACTS
:


Young: owner of candy and fruit store in Escolta which occupied a building as both aresidence and
bodega.


Entered into contract of insurance with Midland, in which insurer promised to pay P3,000 incase
residence and bodega and its contents should be destroyed by fire.
o

One of the conditions (WARRANTY B): During the pendency of this policy, no hazardousgoods be
stored/kept for sale, and no hazardous trade/process be carried on, in thebuilding to which this
insurance applies, or in any building connected therewith.


Young: places 3 boxes filled with
fireworks
in said residence and bodega.


Building was partially destroyed by fire.


Both parties
agreed
that the fireworks
come within the term hazardous goods and that the
fireworks in no way contributed to the fire.


Allegation of insured: Young contends that they were not
stored
and placing them there
does not violate the contract. That he only placed them there because he was notified thathe cannot
use them for the Chinese New Year and in order that he might later send them toa friend in the
province.
ISSUES/HELD
:(1)

Whether or not the fireworks were stored therefore, makes the policy void. YES.
(2)

Whether insured should be allowed to recover since the storage of the fireworks did notcontribute
to the damage occasioned by the fire. NO.
RATIO
:(1)


Whether the goods were stored depends upon the intention of the party.


Nearly all
cases
cited by TC were cases where the article was being put to somereasonable/actual use, which would
not void the policy. (ex. small quantities for sale likegasoline, gunpowder; or for actual use like oil,
paints; or for lighting the purposes).


Dictionary
definition: to deposit for preservation/safe keeping; put away for future use. (diff from TC definitions
in small quantities/for daily use.


In this case, the fireworks were placed in the bodega for future use/consumption or forsafe
keeping, and NOT for present/daily use. They were stored in the bodega as the word is
generally defined.(2)


The fact that it did not contribute to the fire
is beside the point if the storing was in
violation of the contract.


Placing of the firecracker increased the risk. Insured had not paid the premium based uponthe
increased risk, neither had the insurer issued a policy upon the theory of a different risk.


Insured enjoyed the insurance policy upon one risk, when it was issued for an entirelydifferent one.


It was a direct injury to the insurer and changes the basis of the insurance contract

G.R. No. L-2294 May 25, 1951
Lessons Applicable: Disqualification: Public Enemy (Insurance)

FACTS:
October 1, 1941: Christern Huenefeld and co., inc. (Christern), a
company whose major stockholders are German, paid P1M and
obtained a fire policy from Filipinas Cia. de Seguros (Filipinas)
December 10, 1941: U.S. declared a war against Germany
February 27, 1942 (during the japanese occupation): the building
and insured merchandise were burned
o their claimed from Filipinas and the salvage goods were
auctioned for P92,650 who refused since Christen was
organized under the Philippine laws, it was under American
jurisdiction which is an enemy of the Germans
April 9, 1943: The Director of Bureau of Financing ordered Filipinas
to pay the P92,650 to Christen and it did.
Filipinas filed with the CFI the P92,650 paid to Christern
CA affirmed CFI: dismissed the action
Filed a petition for certiorari
ISSUE: W/N Christern is a public enemy and therefore ceased to be
insured

HELD: YES. Ordered to pay Filipinas P77,208.33, Philippine
currency, less the amount of the premium, in Philippine
currency, that should be returned by the Filipinas for the
unexpired term of the policy in question, beginning December
11, 1941
Philippine Insurance Law (Act No. 2427, as amended,) in section 8,
provides that "anyone except a public enemy may be insured
Effect of war, generally. All intercourse between citizens of
belligerent powers which is inconsistent with a state of war is
prohibited by the law of nations. Such prohibition includes all
negotiations, commerce, or trading with the enemy; all acts which
will increase, or tend to increase, its income or resources; all acts of
voluntary submission to it; or receiving its protection; also all acts
concerning the transmission of money or goods; and all contracts
relating thereto are thereby nullified. It further prohibits insurance
upon trade with or by the enemy, upon the life or lives of aliens
engaged in service with the enemy; this for the reason that the
subjects of one country cannot be permitted to lend their assistance
to protect by insurance the commerce or property of belligerent,
alien subjects, or to do anything detrimental too their country's
interest. The purpose of war is to cripple the power and exhaust the
resources of the enemy, and it is inconsistent that one country
should destroy its enemy's property and repay in insurance the
value of what has been so destroyed, or that it should in such
manner increase the resources of the enemy, or render it aid, and
the commencement of war determines, for like reasons, all trading
intercourse with the enemy, which prior thereto may have been
lawful. All individuals therefore, who compose the belligerent
powers, exist, as to each other, in a state of utter exclusion, and
are public enemies
In the case of an ordinary fire policy, which grants insurance only
from year, or for some other specified term it is plain that when the
parties become alien enemies, the contractual tie is broken and the
contractual rights of the parties, so far as not vested.
However, elementary rules of justice (in the absence of specific
provision in the Insurance Law) require that the premium paid by
the respondent for the period covered by its policy from December
11, 1941, should be returned by the petitioner
Geagonia v CA G.R. No. 114427 February 6, 1995
Facts:
Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for
P100,000.00. The 1 year policy and covered thestock trading of dry goods.
The policy noted the requirement that
"3. 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
or properties consisting of stocks in trade, goods in process and/or inventories only
hereby insured, and unless notice be given and the particulars of such insurance or
insurances be stated therein or endorsed in this policy pursuant to Section 50 of the
Insurance Code, by or on behalf of the Company before the occurrence of any loss or
damage, all benefits under this policy shall be deemed forfeited, provided however,
that this condition shall not apply when the total insurance or insurances in force at
the time of the loss or damage is not more than P200,000.00."
The petitioners stocks were destroyed by fire. He then filed a claim which was
subsequently denied because the petitioners stocks were covered by two other fire
insurance policies for Php 200,000 issued by PFIC. The basis of the private
respondent's denial was the petitioner's alleged violation of Condition 3 of the policy.
Geagonia then filed a complaint against the private respondent in the Insurance
Commission for the recovery of P100,000.00 under fire insurance policy and
damages. He claimed that he knew the existence of the other two policies. But, he said
that he had no knowledge of the provision in the private respondent's policy requiring
him to inform it of the prior policies and this requirement was not mentioned to him
by the private respondent's agent.
The Insurance Commission found that the petitioner did not violate Condition 3 as he
had no knowledge of the existence of the two fire insurance policies obtained from the
PFIC; that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o informing
him or securing his consent; and that Cebu Tesing Textile, as his creditor, had
insurable interest on the stocks.
The Insurance Commission then ordered the respondent company to pay complainant
the sum of P100,000.00 with interest and attorneys fees.
CA reversed the decision of the Insurance Commission because it found that the
petitioner knew of the existence of the two other policies issued by the PFIC.

Issues:
1. WON the petitioner had not disclosed the two insurance policies when he obtained
the fire insurance and thereby violated Condition 3 of the policy.
2. WON he is prohibited from recovering

Held: Yes. No. Petition Granted

Ratio:
1. The court agreed with the CA that the petitioner knew of the prior policies issued
by the PFIC. His letter of 18 January 1991 to the private respondent conclusively
proves this knowledge. His testimony to the contrary before the Insurance
Commissioner and which the latter relied upon cannot prevail over a written
admission made ante litem motam. It was, indeed, incredible that he did not know
about the prior policies since these policies were not new or original.
2. Stated differently, provisions, conditions or exceptions in policies which tend to
work a forfeiture of insurance policies should be construed most strictly against those
for whose benefits they are inserted, and most favorably toward those against whom
they are intended to operate.
With these principles in mind, Condition 3 of the subject policy is not totally free
from ambiguity and must be meticulously analyzed. Such analysis leads us to
conclude that (a) the prohibition applies only to double insurance, and (b) the nullity
of the policy shall only be to the extent exceeding P200,000.00 of the total policies
obtained.
Furthermore, by stating within Condition 3 itself that such condition shall not apply if
the total insurance in force at the time of loss does not exceed P200,000.00, the
private respondent was amenable to assume a co-insurer's liability up to a loss not
exceeding P200,000.00. What it had in mind was to discourage over-insurance.
Indeed, the rationale behind the incorporation of "other insurance" clause in fire
policies is to prevent over-insurance and thus avert the perpetration of fraud. When a
property owner obtains insurance policies from two or more insurers in a total amount
that exceeds the property's value, the insured may have an inducement to destroy the
property for the purpose of collecting the insurance. The public as well as the insurer
is interested in preventing a situation in which a fire would be profitable to the
insured.