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.