Insurance Yey

7/28/2019 Insurance Yey

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South Sea v CA G.R. No. 102253 June 2, 1995J. 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.


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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 thewood 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 o f

fact.

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


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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 thereceipt 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 DI GEST FOR THE OTHER FACTS]

CA disagreed with UCPBs standthat 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 least45 days in advance of the end of the poli cyperiod 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; CADECISION 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.
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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. In case of a life or industrial life policy whenever the grace period provision applies [Sec. 77]

2. Any acknowledgment of the receipt of premium is conclusive evidence of payment [Sec. 78]

3. If the parties have agreed to the payment ininstallments 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.

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