Harvardian Colleges v. Country Bankers Insurance Corp.

1 CARA 2

Facts:
>Harvardian is a family corporation, the stockholders of which are Ildefonso Yap, Virginia King Yap and
their children.

> Prior to Aug. 9, 1979, an agent of Country Bankers proposed to Harvardian to insure its school
building. Although at first reluctant, Harvardian agreed.

> Country Banks sent an inspector to inspect the school building and agreed to insure the same for
P500,000 for which Harvardian paid an annual premium of P2,500.

> On Aug. 9, 1979, Country Bankers issued to Harvardian a fire insurance policy. On March 12, 1980,
(39 days before I was born hehehehe )during the effectivity of said insurance policy, the insured
property was totally burned rendering it a total loss.

> A claim was made by plaintiff upon defendant but defendant denied it contending that plaintiff had
no insurable interest over the building constructed on the piece of land in the name of the late Ildefonso
Yap as owner.

> It was contended that both the lot and the building were owned by Ildefonso Yap and NOT by the
Harvardian Colleges.

Issue:
Whether or not Harvardian colleges has a right to the proceeds.

Held:
Harvardian has a right to the proceeds.

Regardless of the nature of the title of the insured or even if he did not have title to the property
insured, the contract of fire insurance should still be upheld if his interest in or his relation to the
property is such that he will be benefited in its continued existence or suffer a direct pecuniary loss from
its destruction or injury. The test in determining insurable interest in property is whether one will derive
pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its
destruction, termination or injury by the happening of the event insured against.

Here Harvardian was not only in possession of the building but was in fact using the same for several
years with the knowledge and consent of Ildefonso Yap. It is reasonably fair to assume that had the
building not been burned, Harvardian would have been allowed the continued use of the same as the
site of its operation as an educational institution. Harvardian therefore would have been directly
benefited by the preservation of the property, and certainly suffered a pecuniary loss by its being
burned.