South Sea v CA G.R. No.

102253 June 2, 1995

J. Vitug Facts: Valenzuela Hardwood entered into an agreement with the defendant Seven Brotherswhereby the latter undertook to load the former's 940 lauan logs for shipment to Manila. South Sea insured the logs for P2,000,000.00 in its marine policy. Valenzuela then gave the check in payment of the premium on the insurance policy to Mr. Victorio Chua. Seven Brothers ship sank resulting in the loss of the logs. A check for P5,625.00 to cover payment of the premium tendered to the insurer but was not accepted. Instead, the South Sea Surety and Insurance Co., Inc. cancelled the insurance policy it issued as of the date of inception for non-payment of the premium due in accordance with Section 77 of the Insurance Code. Valenzuela demanded from South Sea the payment of the proceeds of the policy but the latter denied liability under the policy. Plaintiff likewise filed a formal claim with defendantSeven Brothers Shipping Corporation for the value of the lost logs but the latter denied the claim. Valenzuela filed a complaint a complaint for the recovery of the value of lost logs and freight charges from Seven Brothers Shipping Corporation or from South Sea Surety and Insurance Company, the insurer. The trial court rendered judgment in favor of plaintiff Valenzuela. The Court of Appealsaffirmed the judgment only against the insurance corporation and absolved the shipping entity from liability. The court held that there was a stipulation in the charter party exempted the ship owner from liability in case of loss. In the SC petition, petitioner argues that it should have been freed from any liability to Hardwood. It faults the appellate court (a) for having disregarded Section 77 of the insurance Code and (b) for holding Victorio Chua to have been an authorized representative of the insurer. Issue: WON Mr. Chua acted as an agent of the surety company or of the insured when he receivedthe check for insurance premiums. Held: Agent of the surety. Petition denied. Ratio: To determine if there was a valid contract of insurance, it must be determine if the premium was validly paid to the company or its agents at the time of the loss. The appellate and trial courts have found that Chua acted as an agent. South Sea insisted that Chua has been an agent for less than ten years of the ColumbiaInsurance Brokers, a different company. Appellant argued that Mr. Chua, having received the premiums, acted as an agent under Section 301 of the Insurance Code which provides: Sec. 301. Any person who for any compensation, commission or other thing of value, acts, or aids in soliciting, negotiating or procuring the making of any insurance contract or in placing risk or taking out insurance, on behalf of an insured other than himself, shall be an insurance broker within the intent of this Code, and shall thereby become liable to all the duties requirements, liabilities and penalties to which an insurance broker is subject.

Valenzuela claimed that the second paragraph of Section 306 of the Insurance Code provided: Sec. 306 Any insurance company which delivers to an insurance agent or insurance broker a policy or contract of insurance shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy of contract of insurance at the time of its issuance or delivery or which becomes due thereon. Mr. Chua testified that the marine cargo insurance policy logs was by South Sea to be given to the wood company. When South Sea delivered to Mr. Chua the marine cargo insurance policy for Valenzuelas logs, he is deemed to have been authorized by former to receive the premium which is due on its behalf. When the logs were lost, the insured had already paid the premium to an agent of the South Sea Surety and Insurance Co., Inc., which is consequently liable to pay the insurance proceeds under the policy it issued to the insured. The court followed the factual evidence of the lower courts and held that they didnt try questions of fact.

Tibay v CA G.R. No. 119655. May 24, 1996

J. Bellosillo: Facts: Fortune Life issued a fire insurance Policy to Tibay on her two-storey residential building at Zobel Street, Makati City. The insurance was for P600,000.00 covering the period from January 23, 1987 to January 23, 1988. On January 23 1987, Tibay only paid P600.00 of 3,000 peso premium and left a balance. The insured building was completely destroyed by fire. Tibay then paid the balance. On the same day, she filed a claim on the policy. Her claim was accordingly referred to the adjuster, Goodwill, which immediately wrote Violeta requesting her to furnish it with the necessary documents for the investigation and processing of her claim. Petitioner complied, and she signed a non-waiver agreement. Fortune denied the claim for violation of the Insurance Code. Tibay sued for damages in the amount of P600,000.00 representing the total coverage of the policy. The trial court ruled for petitioners and made fortune liable for the total value of the insured building and personal properties. The Court of Appeals reversed the court by removing liability from Fortune after returning the premium. Hence this petition for review. The petitioner contended that Fortune remained liable under the subject fire insurance policyin spite of the failure of petitioners to pay their premium in full. Issue: May a fire insurance policy be valid, binding and enforceable upon mere partial payment of premium? Held: No. Petition dismissed. It must here be noted that the insured had made, and the insurer had accepted partial premium payment on the policy weeks before the risk insured against took place. An insurance is an aleatory contract effective upon its perfection although the occurrence of a

condition or event may later dictate the demandability of certain obligations. Fortunesstipulation that insurance shall not "be . . . in force until the premium has been fully paid," and that it "shall be deemed effective, valid and binding upon the company only when the premiums therefor have actually been paid in full and duly acknowledged," override the efficaciousness of the insurance contract despite the payment and acceptance. Article 78 of the Insurance Code An acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of its payment, so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid Even if a portion was paid in the premium, the insurance coverage becomes effective and binding, any stipulation in the policy to the contrary notwithstanding.

UCPB General Insurance v. Masagana Telamart (2001)

Tags: 2001, digest, insurance, premium, ucpb v. masagana UCPB GENERAL INSURANCE [UCPB] v. MASAGANA TELAMART [Masagana] 2001 / Davide, Jr. FACTS [SEE 1999 CASE DIGEST FOR THE OTHER FACTS] CA disagreed with UCPBs stand that Masaganas tender of payment of the premiums on 13 July 1992 did not result in the renewal of the policies, having been made beyond the effective date of renewal as provided under Policy Condition No. 26: Renewal Clause. -- Unless the company at least 45 days in advance of the end of the policy period mails or delivers to the assured at the address shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of coverages, the assured shall be entitled to renew the policy upon payment of the premium due on the effective date of renewal. The following facts have been established: 1. For years, UCPB had been issuing fire policies to th Masagana, and these policies were annually renewed. 2. UCPB had been granting Masagana a 60-90-day credit term within which to pay the premiums on the renewed policies. 3. There was no valid notice of non-renewal of the policies, as there is no proof that the notice sent by ordinary mail was received by Masagana, and the copy allegedly sent to Zuellig was ever transmitted to Masagana. 4. The premiums for the policies were paid by Masagana within the 60- 90-day credit term and were duly accepted and received by UCPBs cashier. ISSUE & HOLDING WON IC 77 must be strictly applied to UCPBs advantage despite its practice of granting a 60 - to 90-day credit term for the payment of premiums. NO. MASAGANA WINS THIS TIME. 1999 DECISION SET ASIDE; CA DECISION AFFIRMED RATIO SEC. 77. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.

This was formerly Act 2427, Section 72: SEC. 72. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the peril insured against, unless there is clear agreement to grant the insured credit extension of the premium due. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid. (Underscoring supplied) IC 77 does not restate the portion of IC 72 expressly permitting an agreement to extend the periodto pay the premium. However, there are exceptions to IC 77. 1. 2. In case of a life or industrial life policy whenever the grace period provision applies [Sec. 77] Any acknowledgment of the receipt of premium is conclusive evidence of payment [Sec. 78]

3. If the parties have agreed to the payment in installments of the premium and partial payment has been made at the time of loss [Makati Tuscany Condominium v. CA] 4. The insurer may grant credit extension for the payment of the premium [ Makati Tuscany Condominium] 5. Estoppel IC 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid, but does not expressly prohibit an agreement granting credit extension, and such an agreement is not contrary to morals, good customs, public order or public policy. [Makati Tuscany Condominium v. CA] ON EXCEPTION #4. If the insurer has granted the insured a credit term for the payment of the premium and loss occurs before the expiration of the term, recovery on the policy should be allowed even though the premium is paid after the loss but within the credit term. It would be unjust and inequitable if recovery on the policy would not be permitted against UCPB, which had consistently granted a 60-90-day credit term for the payment of premiums despite its full awareness of IC 77. Estoppel bars it from taking refuge under said section, since Masagana relied in good faith on such practice.