G.R. No. L-22375 July 18, 1975
THE CAPITAL INSURANCE & SURETY CO., INC., petitioner, vs. PLASTIC ERA CO., INC., AND COURT OF APPEALS, respondents.
FACTS:
On December 17, 1960, Capital Insurance (insurer) delivered to the Plastic Era (insured) its open Fire Policy No. 22760 wherein the former undertook to insure the latter's building, equipment, raw materials, products and accessories located at Sheridan Street, Mandaluyong, Rizal. The term of the policy (face value = 100,000) is December 15, 1960 to December 15, 1961 1 o’clock in the afternoon.
When the policy was delivered, Plastic Era failed to pay the corresponding insurance premium. However, through its duly authorized representative, it executed the an acknowledgment receipt.
On January 8, 1961, in partial payment of the insurance premium, Plastic Era delivered to Capital Insurance, a check for the amount of P1,000.00 postdated January 16, 1961 payable to the order of the latter and drawn against the Bank of America. However, Capital Insurance tried to deposit the check only on February 20, 1961 and the same was dishonored by the bank for lack of funds. The records show that as of January 19, 1961 Plastic Era had a balance of P1,193.41 with the Bank of America.
On January 18, 1961 or two days after the insurance premium became due, at about 4:00 to 5:00 o'clock in the morning, the property insured by Plastic Era was destroyed by fire.
The loss and/or damage suffered by Plastic Era was estimated by the Manila Adjustment Company to be P283,875. However, according to the records the same property has been insured by Plastic Era with the Philamgen Insurance Company for P200,000.00.
In less than a month Plastic Era demanded from Capital Insurance the payment of the sum of P100,000.00 as indemnity for the loss of the insured property under Policy No. 22760 but the latter refused for the reason that, among others, Plastic Era failed to pay the insurance premium.
Thus, Plastic Era filed a complaint against Capital Insurance for the recovery of the sum.
DECISION OF LOWER COURTS:
(1) Court of First Instance – Manila: pay Plastic Era 88,325.63. (2) Court of Appeals: affirmed CFI.
ISSUE:
Whether or not a contract of insurance has been duly perfected between the petitioner, Capital Insurance, and respondent Plastic Era
RULING:
Yes, the contract has been perfected.
Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within thirty (30) days from the effective date of policy. By so doing, it has implicitly agreed to modify the tenor of the insurance policy and in effect, waived the provision therein that it would only pay for the loss or damage in case the same occurs after the payment of the premium. Considering that the insurance policy is silent as to the mode of payment, Capital Insurance is deemed to have accepted the promissory note in payment of the premium. This rendered the policy immediately operative on the date it was delivered.
The acknowledgment is deemed to be a promissory note. In other words, a requirement for the payment of the first or initial premium in advance or actual cash may be waived by acceptance of a promissory note
The fact that the check issued by Plastic Era in partial payment of the promissory note was later on dishonored did not in any way operate as a forfeiture of its rights under the policy, there being no express stipulation therein to that effect.
The payment of the premium on the insurance policy therefore became an independent obligation the
non-fulfillment of which would entitle Capital Insurance to recover. It could just deduct the premium due
and unpaid upon the satisfaction of the loss under the policy.
THE CAPITAL INSURANCE & SURETY CO., INC., petitioner, vs. PLASTIC ERA CO., INC., AND COURT OF APPEALS, respondents.
FACTS:
On December 17, 1960, Capital Insurance (insurer) delivered to the Plastic Era (insured) its open Fire Policy No. 22760 wherein the former undertook to insure the latter's building, equipment, raw materials, products and accessories located at Sheridan Street, Mandaluyong, Rizal. The term of the policy (face value = 100,000) is December 15, 1960 to December 15, 1961 1 o’clock in the afternoon.
When the policy was delivered, Plastic Era failed to pay the corresponding insurance premium. However, through its duly authorized representative, it executed the an acknowledgment receipt.
On January 8, 1961, in partial payment of the insurance premium, Plastic Era delivered to Capital Insurance, a check for the amount of P1,000.00 postdated January 16, 1961 payable to the order of the latter and drawn against the Bank of America. However, Capital Insurance tried to deposit the check only on February 20, 1961 and the same was dishonored by the bank for lack of funds. The records show that as of January 19, 1961 Plastic Era had a balance of P1,193.41 with the Bank of America.
On January 18, 1961 or two days after the insurance premium became due, at about 4:00 to 5:00 o'clock in the morning, the property insured by Plastic Era was destroyed by fire.
The loss and/or damage suffered by Plastic Era was estimated by the Manila Adjustment Company to be P283,875. However, according to the records the same property has been insured by Plastic Era with the Philamgen Insurance Company for P200,000.00.
In less than a month Plastic Era demanded from Capital Insurance the payment of the sum of P100,000.00 as indemnity for the loss of the insured property under Policy No. 22760 but the latter refused for the reason that, among others, Plastic Era failed to pay the insurance premium.
Thus, Plastic Era filed a complaint against Capital Insurance for the recovery of the sum.
DECISION OF LOWER COURTS:
(1) Court of First Instance – Manila: pay Plastic Era 88,325.63. (2) Court of Appeals: affirmed CFI.
ISSUE:
Whether or not a contract of insurance has been duly perfected between the petitioner, Capital Insurance, and respondent Plastic Era
RULING:
Yes, the contract has been perfected.
Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within thirty (30) days from the effective date of policy. By so doing, it has implicitly agreed to modify the tenor of the insurance policy and in effect, waived the provision therein that it would only pay for the loss or damage in case the same occurs after the payment of the premium. Considering that the insurance policy is silent as to the mode of payment, Capital Insurance is deemed to have accepted the promissory note in payment of the premium. This rendered the policy immediately operative on the date it was delivered.
The acknowledgment is deemed to be a promissory note. In other words, a requirement for the payment of the first or initial premium in advance or actual cash may be waived by acceptance of a promissory note
The fact that the check issued by Plastic Era in partial payment of the promissory note was later on dishonored did not in any way operate as a forfeiture of its rights under the policy, there being no express stipulation therein to that effect.
If the check is accepted as payment of the premium even though it turns out to be worthless, there is
payment that will prevent forfeiture.
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