Case Digest (G.R. No. 56718)
Facts:
Acme Shoe Rubber & Plastic Corporation v. The Court of Appeals and Domestic Insurance Company of the Philippines, G.R. No. 56718, January 17, 1985, First Division, Melencio‑Herrera, J., writing for the Court. This is a Petition for Review on Certiorari from a Court of Appeals decision reversing a judgment of the Court of First Instance of Rizal, Branch XII, Caloocan City.Petitioner ACME Shoe Rubber & Plastic Corporation had insured its building, machines and merchandise with respondent Domestic Insurance Company of the Philippines since 1946. On May 15, 1962 ACME was covered by Policy No. 24887 (coverage through May 15, 1963). A Renewal Receipt dated May 14, 1963 (RR No. 22989) covered May 15, 1963–May 15, 1964. On January 8, 1964 ACME paid P3,331.26 and the insurer applied that payment as renewal premium for the 1963–1964 period.
On May 15, 1964 the insurer issued Renewal Receipt No. 30127 (for May 15, 1964–May 15, 1965) bearing a stamped note referring to an attached Receipt of Payment Clause and Credit Agreement. The Credit Agreement provided that the premium corresponding to the first ninety days would be considered paid only for the purpose of making the policy valid during that portion of the term; thereafter the policy would automatically become void unless the insured paid the total premium and documentary stamps prior to expiration of the 90‑day period. On May 26, 1964 ACME, through its president, signed a Promissory Note acknowledging RR No. 30127 and promising to pay the premium within ninety days from the effective date (May 15, 1964), and agreeing that failure to pay would automatically cancel the policy and render ACME liable only for a short‑period premium.
ACME’s properties were totally destroyed by fire on October 13, 1964. The insurer disclaimed liability, asserting there was no coverage at the time of loss. On March 20, 1965 ACME sued in the Court of First Instance of Rizal for recovery under the policy and consequential damages for delay. The trial court found for ACME, awarding P200,000 (the policy limit) with interest, consequential damages of P57,500, attorney’s fees and costs, reasoning there had been an intention by the insurer to grant credit and that applying the January 8, 1964 payment to a policy it contended had been automatically cancelled would unjustly enrich the insurer.
On appeal the Court of Appeals reversed and dismissed the suit, holding that ACME’s policy covering 1964–1965 had been automatically cancelled for nonpayment within the agreed extension and thus there was no coverage at the time of the October 13, 1964 fire. ACME then...(Subscriber-Only)
Issues:
- Was the petition properly dismissed because the policy for the 1964–1965 period was automatically cancelled for nonpayment within the agreed 90‑day extension, leaving no coverage at the time of the October 13, 1964 fire?
- Did ACME’s payment of P3,331.26 on January 8, 1964 constitute payment of the 1964–1965 premium such that coverage existed at the time of the loss?
- Did Republic Act No. 3540 (and specifically Sec. 72) operate retroactively to void ACME’s earlier renewal or otherwise affect the parties’ rights?
- Can ACME successfully invoke unjust enrichment to prevent the insurer from applying the January 8, 1964 payment to the 1963–1964 period ...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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