G.R. No. L-22684 - Philippine Phoenix Surety and Insurance, Inc. vs. Woodworks, Inc.

Plaintiff-Appellee: Philippine Phoenix Surety & Insurance, Inc.
Defendant-Appellant: Woodworks, Inc.
Both parties are corporations duly organized and existing under Philippine laws.

On April 1, 1960, the plaintiff issued Fire Insurance Policy No. 9652 to the defendant for an amount of P300,000.00.
The policy was issued for a term of one year, from April 1, 1960 to April 1, 1961.
The terms and conditions of the policy, along with specific premium details, were contained in Annex ‘A’, which was attached to the stipulation of facts in the case.
The premium components were as follows:

Total premium as indicated in the policy amounted to P6,051.95.
A margin fee pursuant to the adopted plan under Republic Act 2609 amounted to P363.72.
Documentary stamps related to the policy amounted to P96.42, as per the attached documentation.

The defendant made a partial payment of P3,000.00 on September 22, 1960, evidenced by Official Receipt No. 30245 issued by the plaintiff.
Despite the partial payment, the remaining balance of the premium, totaling P3,522.09, was still due under the terms of the policy.
The plaintiff made several demands on the defendant to pay the outstanding balance.

The case originally commenced in the Municipal Court of Manila where the plaintiff sought recovery of the unpaid balance.
An adverse decision from the Municipal Court led to an appeal by Woodworks, Inc.
The matter was then elevated to the Court of First Instance (CFI) of Manila (Civil Case No. 50710), where both parties submitted a stipulation of facts that outlined the insurance contract, payment history, and other essential details.

Appellant alleged that the lower court committed multiple errors in its decision, asserting that:

The court erred in stating that in fire insurance policies, the risk attaches upon the issuance and delivery of the policy to the insured.
The court erred in deciding that non-payment of the premium does not cancel a perfected insurance contract.
The court erred in ruling that the premium remained collectible even after partial payment when the complaint was filed.
The court erred in holding that a partial payment rendered the policy effective for the entire policy period.

These claims raised questions on the timing of risk attachment and the legal consequences of partial payment under the perfected contract of insurance.

Whether the issuance and delivery of the fire insurance policy on April 1, 1960 perfected the contract, thereby binding both parties despite the non-payment of the full premium.
Whether the risk under the policy attaches upon issuance and delivery, independent of full premium payment.

Whether the partial payment of P3,000.00 affects the enforceability of the contract and the obligation of the insured to pay the remaining premium.
Whether a partially performed contract can still obligate both parties to fully perform their respective obligations.

Whether non-payment of the premium constitutes grounds for the cancellation of the insurance contract.
Whether the insurer’s demand for specific performance (i.e., payment of the remaining balance) is appropriate under the perfected contract.

Whether the partial payment made by the defendant renders the policy effective for the entire period, or whether such payment merely constitutes a partial fulfillment of the insured’s obligation.
The implications of the court’s interpretation that neither party has the unilateral discretion to cancel a perfected contract based on non-performance.