Facts:

In the case of Pedro Arce vs. The Capital Insurance & Surety Co., Inc., G.R. No. L-28501, decided on September 30, 1982, the plaintiff-appellee, Pedro Arce, was the owner of a residential house located in Tondo, Manila. This property had been insured with the defendant-appellant, The Capital Insurance & Surety Co., Inc. (hereinafter referred to as "the Company"), under Fire Policy No. 24204 since 1961. On November 27, 1965, the Company issued Renewal Certificate No. 47302, which covered the insurance period from December 5, 1965, to December 5, 1966, and requested a premium payment of P38.10. Anticipating a delay in payment, Arce, through his wife, promised to pay the premium by January 4, 1966. The Company accepted this promise; however, the premium was not paid by the specified date. Tragically, on January 8, 1966, Arce's house was completely destroyed by fire. Following this incident, on January 10, 1966, Arce's wife submitted a claim for indemn...

Facts:

Background of the Insurance Contract

• Pedro Arce, the INSURED and owner of a residential house in Tondo, Manila, had insured his property with The Capital Insurance and Surety Co., Inc. (hereinafter, the COMPANY) since 1961 under Fire Policy No. 24204.
• On November 27, 1965, the COMPANY sent Renewal Certificate No. 47302 covering the period from December 5, 1965, to December 5, 1966, and requested the payment of the renewal premium amounting to P38.10.

Events Leading to the Loss

• Anticipating the possibility of a delayed payment, the INSURED, through his wife, promised to pay the renewal premium on January 4, 1966.
• Despite the COMPANY’s acceptance of this promise, the premium was not received on the agreed date.
• On January 8, 1966, a fire completely destroyed the INSURED’s house.

The Claim and COMPANY’s Response

• On January 10, 1966, the INSURED’s wife presented a claim for indemnity before the COMPANY.
• The COMPANY denied that any indemnity was due on the basis that the renewal premium had not been paid.
• Despite its denial, the COMPANY tendered a check for P300.00 as financial aid (ex gratia) to assist the INSURED, a check which was received by the INSURED’s daughter, Evelina R. Arce.

Waiver and Subsequent Actions

• The check voucher signed by Evelina noted that the disbursement was "in full settlement (ex gratia) of the fire loss under Claim No. F-554 Policy No. F-24202."
• Later, when the INSURED and his wife went to the COMPANY’s office to have his signature identified on the check voucher prior to encashment, the COMPANY reiterated that the check was given “not as an obligation, but as a concession” because no premium had been received.
• The INSURED cashed the check and subsequently initiated a suit against the COMPANY based on the fire policy.

Procedural History

• In the Court of First Instance of Manila, the trial court ordered the COMPANY to pay the proceeds of the fire insurance policy to the INSURED.
• The COMPANY appealed the decision to the Court of Appeals on questions of law.

Issue:

Validity of the Insurance Contract

• Whether the insurance contract remained valid and binding on the COMPANY despite the non-payment of the renewal premium.
• Whether the grace period granted to the INSURED to pay the premium modifies the essential requirement of prompt payment.

Effect of the Ex Gratia Payment

• Whether the COMPANY’s tender of a check as financial aid, together with the waiver signed by the INSURED’s daughter, constituted an acceptance of liability under the insurance policy.

Application of the Insurance Act and Party Stipulations

• Whether Section 72 of the Insurance Act, as amended by R.A. No. 3540, precludes the COMPANY’s liability when the premium has not been paid.
• Whether the specific stipulation in the policy stating that the contract is binding only upon the receipt of full premium and issuance of an official receipt effectively nullifies any claim by the INSURED when this condition is unmet.

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Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)