Pioneer Insurance and Surety Corporation vs. Yap (Insurance Law)

Pioneer Insurance and Surety Corporation vs. Yap

(Insurance Law)

61 SCRA 426 (G.R. No. L-36232)

December 19, 1974

Petitioners:	Pioneer Insurance and Surety Corporation
Respondents:	Oliva Yap, represented by her attorney-in-fact, Chua Soon Poon

J. Fernandez:

FACTS:

Respondent Oliva Yap was the owner of a store in a two-storey building located in Manila.

On April 19, 1962, respondent Yap took out a fire policy from Pioneer Insurance for ₱25,000.00 covering her stocks, officer furniture fixtures and fittings of every kind and description. Among the conditions in the policy was:

“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.” (Italics supplied)”

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.

On September 26, 1962, respondent 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.

On December 19, 1962, a fire broke out in the building housing respondent Yap’s above-mentioned store, and the said store was burned. Respondent Yap filed an insurance claim, but the same was denied in petitioner’s letter of May 17, 1963, on the ground of “breach and/or violation of any and/or all terms and conditions” of Policy No. 4219.

ISSUE:

Whether or not petitioner should be absolved from liability on the policy.

HELD:

Yes. By the plain terms of the policy, other insurance without the consent of petitioner would ipso facto 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 obvious purpose of the aforesaid requirement in the policy 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.

Philippine Pryce Assurance Corporation vs. Court of Appeals (Insurance Law)

Philippine Pryce Assurance Corporation vs. Court of Appeals

(Insurance Law)

230 SCRA 164 (G.R. No. 107062)

February 21, 1994

Petitioners:	Philippine Pryce Assurance Corporation
Respondents:	Court of Appeals, (Fourteenth Division) and Gregoco, Inc.

J. Nocon:

FACTS:

Petitioner, Interworld Assurance Corporation (the company now carries the corporate name Philippine Pryce Assurance Corporation), was the butt of the complaint for collection of sum of money by Gregoco, Inc. before the RTC of Makati Branch 138. The complaint alleged that petitioner issued two surety bonds (No. 0029 dated July 24, 1987 and No. 0037, dated October 7, 1987) in behalf of its principal Sagum General Merchandise for five hundred thousand pesos (₱500,000.00) and one million pesos (₱1,000,000.00) respectively.

In its Answer, petitioner admitted having executed the said bonds, but denied liability because allegedly 1) the checks which were to pay for the premiums bounced and were dishonored hence there is no contract to speak of between petitioner and its supposed principal; and 2) that the bonds were merely to guarantee payment of its principal obligation, thus, excussion is necessary.

ISSUE:

Whether or not there is a valid contract of surety between Philippine Pryce and Sagum despite, the bouncing of check, supposed to pay for the premium.

HELD:

Yes. Finally, there is reason to believe that petitioner does not really have a good defense. Petitioner hinges its defense on two arguments, namely: a) that the checks issued by its principal which were supposed to pay for the premiums, bounced, hence there is no contract of surety to speak of; and 2) that as early as 1986 and covering the time of the Surety Bond, Interworld Assurance Company (now Phil. Pryce) was not yet authorized by the Insurance Commission to issue such bonds. The Insurance Code states that: “SECTION 177. The surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding unless and until the premium therefor has been paid, except where the obligee has accepted the bond, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety. x x x” (emphasis added) The above provision outrightly negates petitioner’s first defense. In a desperate attempt to escape liability, petitioner further asserts that the above provision is not applicable because the respondent allegedly had not accepted the surety bond, hence could not have delivered the goods to Sagum Enterprises. This statement clearly intends to muddle the facts as found by the trial court and which are on record.

On the other hand, petitioner’s defense that it did not have authority to issue a Surety Bond when it did is an admission of fraud committed against respondent. No person can claim benefit from the wrong he himself committed. A representation made is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.

UCPB General Insurance Co., Inc. vs. Masagana Telemart Inc. (Insurance)

UCPB General Insurance Co., Inc. vs. Masagana Telemart Inc.

(Insurance Law)

356 SCRA 307 (G.R. No. 137172)

April 4, 2001

Petitioners:	UCPB General Insurance Co., Inc.
Respondents:	Masagana Telemart Inc.

CJ. Davide, Jr.:

FACTS:

On April 15, 1991, petitioner issued five (5) insurance policies covering respondent’s various property described therein against fire, for the period from May 22, 1991 to May 22, 1992.

In March 1992, petitioner evaluated the policies and decided not to renew them upon expiration of their terms on May 22, 1992. Petitioner advised respondent’s broker, Zuellig Insurance Broker’s, Inc. of its intention not to renew the policies.

On April 6, 1992, petitioner gave written notice to respondent of the non-renewal of the policies at the address stated in the policies.

On June 13, 1992, fire razed respondent’s property covered by three of the insurance policies petitioner issued.

On July 13, 1992, respondent presented to petitioner’s cashier at its head office five (5) manager’s checks in the total amount of ₱225,753.95, representing premium for the renewal of the policies from May 22, 1992 to May 22, 1993. No notice of loss was filed by respondent under the policies prior to July 14, 1992.

On July 14, 1992, respondent filed with petitioner its formal claim for indemnification of the insured property razed by fire.

On the same day, July 14, 1992, petitioner returned to respondent the five (5) manager’s check that it tendered, and at the same time rejected respondent’s claim for the reasons (a) that the policies had expired and were not renewed and (b) that the fire occurred on June 13, 1992, before respondent’s tender of premium payment.

On July 21, 1992, respondent filed with the Regional Trial Court, Branch 58, Makati City, a civil complaint against petitioner for recovery of ₱18,645,000.00 representing the face value of the policies covering respondent’s insured property razed by fire and for attorney’s fees.

ISSUE:

Whether Sec. 77 of the Insurance Code of 1978 must strictly be applied to petitioner’s advantage despite its practice of granting a 60 to 90 day credit term for the payment of the premiums.

HELD:

No. It can be seen at once that Section 77 does not restate the portion of Section 72 expressly permitting an agreement to extend the period to pay the premium. But are there exceptions to Section 77? The answer is in the affirmative. The first exception is provided by Section 77 itself, and that is, in case of a life or industrial life policy whenever the grace period provision applies. The second is that covered by Section 78 of the Insurance Code, which provides: SEC. 78. Any 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 premium is actually paid. A third exception was laid down in Makati Tuscany Condominium Corporation vs. Court of Appeals, wherein we ruled that Section 77 may not apply if the parties have agreed to the payment in installments of the premium and partial payment has been made at the time of loss, x x x Not only that. In Tuscany, we also quoted with approval the following pronouncement of the Court of Appeals in its Resolution denying the motion for reconsideration of its decision: x x x By the approval of the aforequoted findings and conclusion of the Court of Appeals, Tuscany has provided a fourth exception to Section 77, namely, that the insurer may grant credit extension for the payment of the premium. This simply means that 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.

Moreover, there is nothing in Section 77 which prohibits the parties in an insurance contract to provide a credit term within which to pay the premiums. That agreement is not against the law, morals, good customs, public order or public policy. The agreement binds the parties.

Finally in the instant case, it would be unjust and inequitable if recovery on the policy would not be permitted against Petitioner, which had consistently panted a 60- to 90-day credit term for the payment of premiums despite its full awareness of Section 77. Estoppel bars it from taking refuge under said Section, since Respondent relied in good faith on such practice. Estoppel then is the fifth exception to Section 77.

Malayan Insurance Co., Inc. vs. Cruz Arnaldo (Insurance Law)

Malayan Insurance Co., Inc. vs. Cruz Arnaldo

(Insurance Law)

154 SCRA 672 (G.R. No. L-67835)

October 12, 1987

Petitioners:	Malayan Insurance Co., Inc. (MICO)
Respondents:	Gregoria Cruz Arnaldo, in her capacity as the Insurance Commissioner and Coronacion Pinca

J. Cruz:

FACTS:

On June 7, 1981, the petitioner Malayan Insurance Co., (MICO) issued to respondent, Coronacion Pinca, a Fire Insurance Policy on her property for ₱100,000.00, effectively July 22, 1981, until July 22, 1982.

On October 15, 1981, MICO allegedly cancelled the policy for non-payment of the premium and sent the corresponding notice to Pinca.

On December 24, 1981, payment of the premium for Pinca was received by Domingo Adora agent of MICO.

On January 15, 1982, Adora remitted this payment to MICO, together with other payments.

On January 18, 1982, Pinca’s property was completely burned.

On February 5, 1982, Pinca’s payment was returned by MICO to Adora on the ground that her policy had been cancelled earlier. But Adora refused to accept it.

In due time, Pinca made the prerequisite demands for payment, which MICO rejected. She then went to the Insurance Commission. It is because she was ultimately sustained by the latter that MICO has come to us for relief.

ISSUE:

Whether there is a valid insurance contract at the time of the loss.

HELD:

Yes. MICO claims it cancelled the policy in question on October 15, 1981, for non-payment of premium. To support this assertion, it presented one of its employees, who testified that "the original of the endorsement and credit memo"—presumably meaning the alleged cancellation—"were sent the assured by mail through our mailing section." However, there is no proof that the notice, assuming it complied with the other requisites mentioned above, was actually mailed to and received by Pinca. All MICO offers to show that the cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our mailing section," without more. The petitioner then says that its "stand is enervated (sic) by the legal presumption of regularity and due performance of duty," (not realizing perhaps that "enervated" means "debilitated," not "strengthened").

Makati Tuscany Condominium Corp. vs. Court of Appeals (Insurance Law)

Makati Tuscany Condominium Corp. vs. Court of Appeals

(Insurance Law)

215 SCRA 462 (G.R. No. 95546)

November 6, 1992

Petitioners:	Makati Tuscany Condominium Corporation
Respondents:	Court of Appeals, American Home Assurance Co., represented by American Underwriters (Phils.) Inc.

J. Bellosillo:

FACTS:

This case involves a purely legal question whether payment by installment of the premiums due on an insurance policy invalidates the contract of insurance, in view of Sec. 77 of the Insurance Code.

In 1982, private respondent American Home Assurance Co. (AHAC), represented by American International Underwriters (Phils), Inc., issued in favor of petitioner TUSCANY an insurance policy on the latter’s building and premises for the period March 1, 1982 and ending March 1, 1983, with a total premiums of ₱466,103.05. The premium was paid on five installments. In 1983 the policy was renewed, and the premium was again paid on installments. In 1984, the policy was again renewed, and the premium paid on installments. However, after two installments, TUSCANY refused to pay the balance of the premium.

Consequently, AHAC filed an action to recover the balance. In its answer, TUSCANY explained that it discontinued the payment of premium claiming, among others, that the policy was never binding and valid and no risk attached to the policy.

ISSUE:

Whether payment by installment of the premiums due on an insurance policy invalidates the contract of insurance.

HELD:

No. The subject policies are valid even if the premiums were paid on installments. The records clearly show that petitioner and private respondent intended subject insurance policies to be binding and effective notwithstanding the staggered payment of the premiums. The initial insurance contract entered into in 1982 was renewed in 1983, then in 1984. In those three (3) years, the insurer accepted all the installment payments. Such acceptance of payments speaks loudly of the insurer’s intention to honor the policies it issued to petitioner. Certainly, basic principles of equity and fairness would not allow the insurer to continue collecting and accepting the premiums, although paid on installments, and later deny liability on the lame excuse that the premiums were not prepaid in full.

It appearing from the peculiar circumstances that the parties actually intended to make the three (3) insurance contracts valid, effective and binding, petitioner may not be allowed to renege on its obligation to pay the balance of the premium after the expiration of the whole term of the third policy (No. AH-CPP-9210651) in March 1985. Moreover, as correctly observed by the appellate court, where the risk is entire and the contract is indivisible, the insured is not entitled to a refund of the premiums paid if the insurer was exposed to the risk insured for any period, however brief or momentary.

Vda. de Gabriel vs. Court of Appeals (Insurance Law)

Vda. de Gabriel vs. Court of Appeals

(Insurance Law)

264 SCRA 137 (G.R. No. 103883)

November 11, 1996

Petitioners:	Jacqueline Jimenez Vda. de Gabriel
Respondents:	Court of Appeals and Fortune Insurance and Surety Company, Inc.

J. Vitug:

FACTS:

The petitioner for review on certiorari seeks the reversal of the decision of the Court of Appeals setting aside the judgment of the Regional Trial Court which ordered private respondent Fortune Insurance and Surety Company, Inc., to pay petitioner Jacqueline Jimenez Vda. de Gabriel, the surviving spouse and beneficiary in an accident (group) insurance of her dead husband, the amount of ₱100,000.00, plus legal interest.

Marcelino Gabriel, the insured, was employed by Emerald Construction & Development Corporation (“ECDC”) at its construction project in Iraq. He was covered by a personal accident insurance in the amount of ₱100,000.00 under a group policy procured from private respondent by ECDC for its overseas workers.

On May 22, 1982, within the life of the policy, Gabriel died in Iraq. A year later, or on July 12, 1983, ECDC reported Gabriel’s death to private respondent by telephone. Ultimately private respondent denied the claim of ECDC on the ground of prescription. Petitioner went to court alleging that her husband died of electrocution while working.

ISSUE:

Whether or not the cause of action had prescribed.

HELD:

Yes. On the issue of “prescription”, private respondent correctly invoked Section 384 of the Insurance Code; viz: “Sec. 384. Any person having any claim upon the policy issued pursuant to this chapter shall without any unnecessary delay, present to the insurance company concerned a written notice of claim setting forth the nature, extent and duration of the injuries sustained as certified by a duly licensed physician. Notice of claim must be filed within six months from date of the accident, otherwise, the claim shall be deemed waived. Action or suit for recovery of damage due to loss or injury must be brought, in proper cases, with the Commissioner on the Courts within one year from the denial of the claim, otherwise, the claimant’s right of action shall prescribe.” The notice of death was given to private respondent, concededly, more than a year after the death of petitioner’s husband. Private respondent in invoking prescription, was not referring to the one-year period from the denial of the claim within which to file an action against an insurer but obviously to the written notice of claim that had to be submitted within six months from the time of the accident.

Yes. The petitioner’s claim that the insurance covered only the building and not the elevator is absured, to say the least. This Court has little patience with puerile arguments that affront common sense, let alone basic legal principles with which even law students are familiar. The circumstance that the building insured is seven stories high and so had to be provided with elevators a legal requirement known to the petitioner as an insurance company makes its contention all the more ridiculous.

No less preposterous is the petitioner’s claim that the elevators were insured after the occurrence of the fire, a case of shutting the barn door after the horse had escaped, so to speak. This pretense merits scant attention. Equally underserving of serious is its submission that the elevators were not damaged by the fire, against the report of arson investigators of the INP and indeed, its own expressed admission in its answer where it affirmed that the fire “damaged or destroyed a portion of the 7^th floor of the insured building and more particularly a Hitachi elevator control panel.”

The petitioner argues that since at the time of the fire the building insured was worth ₱5,800,000.00, the private respondent should be considered its own insurer for the difference between that amount and the face value of the policy and should share pro rata in the loss sustained. Accordingly, the private respondent is entitled to an indemnity of only ₱67,629.31, the rest of the loss to be shouldered by it alone. In support of this contention, the petitioner cites Condition 17 of the policy, which provides: xxx. However, there is no evidence on record that the building was worth ₱5,800,000.00 at the time of the loss; only the petitioner says so and it does not back up its self-serving estimate with any independent corroboration. On the contrary, the building was insured at ₱2,500,000.00, and this must be considered, by agreement of the insurer and the insured, the actual value of the property insured on the day the fire occurred. This valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed.

As defined in the aforestated provision, which is not Section 60 of the Insurance Code,” and open policy is one which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss.” This means that the actual loss, as determined will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not be exceed the face value of the policy.

The actual loss has been ascertained in this case and, to repeat, this Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily. There is no such showing. Hence, applying the open policy clause as expressly agreed upon by the parties in their contract we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of ₱508,867.00.

Development Insurance Corporation vs. Intermediate Appellate Court (Insurance Law)

Development Insurance Corporation vs.

Intermediate Appellate Court

(Insurance Law)

143 SCRA 62 (G.R. No. L-71360)

June 16, 1986

Petitioners:	Development Insurance Corporation
Respondents:	Intermediate Appellate Court and Philippine Union Realty Development Corporation

J. Cruz:

FACTS:

This case will require an examination of Policy No. RY/F-082, as renewed by virtue of which the petitioner Development Insurance insured Philippine Union Realty Development Corporation’s building against fire for ₱2,500,000.00.

The petitioner claims that the insurance covered only the building but not the elevators. The petitioner also argues that since at the time of the fire the building insured was worth ₱5,800,000.00, the private respondent should be considered its own insurer for the difference between the amount and the face value of the policy and should share pro rata in the loss sustained. Accordingly, the respondent is entitled to an indemnity of only ₱67,629.31, the rest of the loss to be shouldered by it alone. In support of this contention, the petitioner cites Condition 17 of the policy, which provides:

“If the property hereby insured shall, at the breaking out of any fire, be collectively of greater value that the sum insured thereon then the insured shall be considered as being his own insurer for the difference, and shall bear a ratable proportion of the loss accordingly. Every item, if more than one, of the policy shall be separately subject to this condition”

ISSUE:

Whether the claim of the insurance company that insurance of building does not cover the elevator is incorrect.

HELD:

Yes. The petitioner’s claim that the insurance covered only the building and not the elevator is absured, to say the least. This Court has little patience with puerile arguments that affront common sense, let alone basic legal principles with which even law students are familiar. The circumstance that the building insured is seven stories high and so had to be provided with elevators a legal requirement known to the petitioner as an insurance company makes its contention all the more ridiculous.

No less preposterous is the petitioner’s claim that the elevators were insured after the occurrence of the fire, a case of shutting the barn door after the horse had escaped, so to speak. This pretense merits scant attention. Equally underserving of serious is its submission that the elevators were not damaged by the fire, against the report of arson investigators of the INP and indeed, its own expressed admission in its answer where it affirmed that the fire “damaged or destroyed a portion of the 7^th floor of the insured building and more particularly a Hitachi elevator control panel.”

The petitioner argues that since at the time of the fire the building insured was worth ₱5,800,000.00, the private respondent should be considered its own insurer for the difference between that amount and the face value of the policy and should share pro rata in the loss sustained. Accordingly, the private respondent is entitled to an indemnity of only ₱67,629.31, the rest of the loss to be shouldered by it alone. In support of this contention, the petitioner cites Condition 17 of the policy, which provides: xxx. However, there is no evidence on record that the building was worth ₱5,800,000.00 at the time of the loss; only the petitioner says so and it does not back up its self-serving estimate with any independent corroboration. On the contrary, the building was insured at ₱2,500,000.00, and this must be considered, by agreement of the insurer and the insured, the actual value of the property insured on the day the fire occurred. This valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed.

As defined in the aforestated provision, which is not Section 60 of the Insurance Code,” and open policy is one which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss.” This means that the actual loss, as determined will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not be exceed the face value of the policy.

The actual loss has been ascertained in this case and, to repeat, this Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily. There is no such showing. Hence, applying the open policy clause as expressly agreed upon by the parties in their contract we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of ₱508,867.00.