Case Digest (G.R. No. 95546)
Facts:
Makati Tuscany Condominium Corporation v. The Court of Appeals, American Home Assurance Co., G.R. No. 95546, November 06, 1992, First Division, Bellosillo, J., writing for the Court.Petitioner Makati Tuscany Condominium Corporation (TUSCANY) obtained Insurance Policy No. AH-CPP-9210452 from private respondent American Home Assurance Co. (AHAC) (represented by American International Underwriters (Phils.), Inc.) covering the period 1 March 1982 to 1 March 1983 with a total premium of P466,103.05; the premium was paid in several installments during 1982, all accepted by AHAC. AHAC issued a renewal/replacement policy (No. AH-CPP-9210596) covering 1 March 1983 to 1 March 1984 for the same premium, which was likewise paid in staggered installments accepted by AHAC.
On 20 January 1984 AHAC again renewed the policy (No. AH-CPP-9210651) for 1 March 1984 to 1 March 1985. Petitioner made two installment payments accepted by AHAC (6 February 1984 and 6 June 1984) but thereafter refused to pay the remaining P314,103.05 balance. AHAC sued to recover the unpaid balance on Policy No. AH-CPP-9210651.
In its answer with counterclaim petitioner admitted issuance of the policy but alleged that the insurer’s premium receipts contained reservations disclaiming liability for losses occurring before full premium payment and that no risk attached because the premiums were not prepaid; petitioner sought refunds of premiums paid (initial counterclaim for P152,000.00 later amended to P924,206.10 covering 1982–85 premiums). Both parties moved for summary judgment.
The trial court, on 8 October 1987, dismissed both the complaint and the counterclaim, finding that premium payments were made during the policies’ terms so risk had attached (thus refund not justified) but also concluding that, given the receipts’ reservations, AHAC could not demand unpaid premiums after lapse of the 1984–85 policy, so petitioner was justified in refusing to pay the balance. Both parties appealed.
The Court of Appeals, in a decision penned by Justice Minerva P. Gonzaga-Reyes (concurring: Justices Ricardo J. Francisco and Salome A. Montoya), modified the trial court’s judgment by ordering petitioner to pay the unpaid premium balance of P314,103.05 plus legal interest and by affirming denial of the counterclaim. The appellate court held that by agreeing to installment payments and by accepting them the parties evidenced an intention to be bound and that Section 77 of P.D. 612 does not preclude installment arrangements or a finding that the contract became binding upon payment of the first installment.
Petitioner filed a ...(Pro-only)
Issues:
- Does payment of insurance premiums by installments invalidate the insurance contract under Section 77 of P.D. 612 (the Insurance Code)?
- Is petitioner entitled to a refund of premiums paid or justified in refusing to pay the unpaid balance where the insurer accepted installment payments and risk was incurred ...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)