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").