Philippine Harvardian College v. Country Bankers Insurance Corp.

FACTS:

 Petitioner Yap was president of the Philippine Harvardian College, an educational

institution, of which he, his wife, and his children were all the stockholders.
 In 1979, a sales agent of respondent Country Bankers proposed that Harvardian
insure its primary school building, which Harvardian agreed to.
o After inspection, the school building was insured for PhP 500,000.00.
o Harvardian contracted itself to pay an annual premium of PhP 2,500.00.
o County Bankers therefore issued the fire insurance policy to Harvardian.
 In 1980, during the effectivity of the abovementioned insurance policy, the school
building was totally burned, rendering it a total loss.
 Harvardian therefore made a claim on Country Bankers under its insurance policy.
o Country Bankers denied the claim, contending that plaintiff had no insurable
interest over the building, since it had been constructed on the piece of land
in the name of the late Yap.
 Neither party contended that the lot and the building were both in the name of Yap,
nor that the policy was in the name of Harvardian.

ISSUE: W/N Harvardian has a right to the proceeds of the fire insurance policy.

HELD: Yes, it does.

 As a rule, the nature of the title of the insured over the property which was under
the policy is immaterial to the insured’s right to collect on the policy.
o The insured has a right to collect on the policy, so olong as his relation to the
insured property is such that he will be benefited by its existence and injured
by its loss.
o 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.
 Harvardian was not only in possession of the building, but in fact had been using the
same for several years with the knowledge and consent of Yap.
o Thus, it is reasonable to assume that, had the building not been burned,
Harvardian would have been allowed the continued use of the site for its
operations.
o Harvardian is therefore directly affected by the loss thereof.

WHEREFORE, Harvardian has the right to the proceeds of the fire insurance polic.