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.