VALENZUELA vs COURT OF APPEALS, ARAGON et al.

Facts: Arturo Valenzuela is a General Agent of Philippine American General Insurance (Philamgen)since 1965. He was authorized to solicit and sell in behalf of Philamgen all kinds of non-life insurance, and in consideration of services rendered was entitled to receive the full agent's commission of 32.5% from Philamgen under the scheduled commission rates. From 1973 to1975, Valenzuela solicited marine insurance from one of his clients, the Delta Motors in the amount of P4.4 Million from which he was entitled to a commission of 32%. However, Valenzuela did not receive his full commission which amounted to P1.6 Million from the P4.4Million insurance coverage of the Delta Motors. In 1977, Philamgen started to become interested in and expressed its intent to share in the commission due Valenzuela on a fifty-fifty basis. Because of the refusal of Valenzuela, Philamgen terminated the General Agency Agreement of Valenzuela. Issue: Whether or not Philamgen could continue to hold Valenzuela jointly and severally liable with the insured for unpaid premiums Held: NO. The principal cause of the termination of Valenzuela as General Agent of Philamgen arose from his refusal to share his Delta commission. The apparent bad faith of the private respondents in terminating the General Agency Agreement of petitioners. The agency involving petitioner and private respondent is one "coupled with an interest," and, therefore, should not be freely revocable at the unilateral will of the latter. With the termination of the General Agency Agreement, Valenzuela would no longer be entitled to commission on the renewal of insurance policies of clients sourced from his agency. Despite the termination of the agency, Philamgen continued to hold Valenzuela jointly and severally liable with the insured for unpaid premiums. Valenzuela had an interest in the continuation of the agency when it was unceremoniously terminated not only because of the commissions he should continue to receive from the insurance business he has solicited and procured but also for the fact that by the very acts of the respondents, he was made liable to Philamgen in the event the insured fail to pay the premiums due. They are estopped by their own positive averments and claims for damages. Therefore, the respondents cannot state that the agency relationship between Valenzuela and Philamgen is not coupled with interest. There is an exception to the principle that an agency is revocable at will and that is when the agency has been given not only for the interest of the principal but for the interest of third persons or for the mutual interest of the principal and the agent. In these cases, it is evident that the agency ceases to be freely revocable by the sole will of the principal. The factor rendering Philamgen and the private respondents liable in damages is that the termination by them of the General Agency Agreement was tainted with bad faith. If a principal acts in bad faith and with abuse of right in terminating the agency, then he is liable in damages. Valenzuela is not liable to Philamgen for the unpaid and uncollected premiums. Under Section 77 of the Insurance Code, the remedy for the non-payment of premiums is to put an end to and render the insurance policy not binding. CONSTANTINO vs ASIA LIFE INSURANCE COMPANY Facts: There are two cases consolidated here. First is that of Constantino who acquired a life insurance from Asia Life in September 1941. He paid the first premium which was good until September 1942. War broke out and he was not able to pay the second and subsequent premiums. He died in 1944. Asia Life Insurance Company, being an American Corp., had to close its branch office in Manila by reason of the Japanese occupation, i.e. from January 2, 1942, until the year 1945. The second case was that of Tomas Ruiz who acquired his life insurance from Asia Life in August 1938. He has been paying his premium religiously but due to the war, he was not able to pay his

subsequent premiums in 1942. Upon the Japanese occupation, the insurer and insured were not able to deal with each other Because the insured had borrowed on the policy P234.00 in January, 1941, the cash surrender value of the policy was sufficient to maintain the policy in force only up to September 7, 1942. Tomas Ruiz died on February 16, 1945 with Agustina Peralta as beneficiary. Her demand for payment was refused on the ground of non-payment of the premiums. The beneficiaries from both insurance policies filed their claims when the war is over. They point out that the obligation of the insured to pay premiums was excused (suspended) during the war owing to impossibility of performance, and that consequently no unfavorable consequences should follow from such failure (New York Rule). Asia Life argued that the nonpayment of premiums cancelled the insurance policy. An insurance contract is one in which time is material and of the essence. Non-payment at the day involves absolute forfeiture if such be the terms of the contract (United States Rule) ISSUE: Whether or not the beneficiaries are entitled to the claims. HELD: Yes. It would seem that pursuant to the express terms of the policy, non-payment of premium produces its avoidance. Forfeitures of insurance policies are not favored, but courts cannot for that reason alone refuse to enforce an insurance contract according to its meaning. Nevertheless, inasmuch as the non-payment of premium was the consequence of war, it should be excused and should not cause the forfeiture of the policy The Supreme Court adopts the United States Rule. It should be noted that the parties contracted not only for peacetime conditions but also for times of war, because the policies contained provisions applicable expressly to wartime days. The logical inference, therefore, is that the parties contemplated uninterrupted operation of the contract even if armed conflict should ensue. As beneficiaries, they are entitled to receive the proceeds of the policies minus all sums due for premiums in arrears. The non-payment of the premiums was caused by the closing of Asia's offices in Manila during the Japanese occupation and the impossible circumstances created by war. Thus, adopt the United States Rule: first policy had no reserve value, and that the equitable values of the second had been practically returned to the insured in the form of loan and advance for premium. EDILLON vs MANILA BANKERS LIFE INSURANCE CORPORATION Facts: Sometime in April 1969, Carmen O, Lapuz applied Manila Bankers for insurance coverage against accident and injuries. She filled up the blank application form given to her and filed the same with the respondent insurance corporation. In the said application form she gave the date of her birth as July 11, 1904. On the same date, she paid the sum of P20.00 representing the premium for which she was issued the corresponding receipt signed by an authorized agent of Manila Bankers. Upon the filing and the payment of the premium, the respondent insurance corporation issued to Carmen O. Lapuz its Certificate of Insurance. The policy was to be effective for a period of 90 days. During the effectivity of the certificate of insurance Carmen Lapuz died on a vehicular accident in the North Diversion Road. On June 7, 1969, petitioner Regina L. Edillon, a sister of the insured and who was the named beneficiary in the policy, filed her claim for the proceeds of the insurance, submitting all the necessary papers and other requisites. However, her claim was denied by the respondent corporation hence her filing of complaint in the Court of First Instance of Rizal on August 27, 1969. The respondent insurance corporation asserts that since Carmen Lapuz was over 60 years of age the policy in question was null and void because there is a provision in the certificate of insurance excluding its liability to pay claims under the policy in behalf of persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years. The trial court dismissed the complaint. Hence, this petition.

Issue: Whether or not the acceptance by the private respondent insurance corporation of the premium and the issuance of the corresponding certificate of insurance should be deemed a waiver of the exclusionary condition of overage stated in the said certificate of insurance Held: Yes. The age of the insured Carmen 0. Lapuz was not concealed to the insurance company. Her application for insurance coverage which was on a printed form furnished by private respondent and which contained very few items of information clearly indicated her age of the time of filing the same to be almost 65 years of age. Despite such information which could hardly be overlooked in the application form, considering its prominence thereon and its materiality to the coverage applied for, the respondent insurance corporation received her payment of premium and issued the corresponding certificate of insurance without question. The accident which resulted in the death of the insured, a risk covered by the policy, occurred on May 31, 1969 or FORTY-FIVE (45) DAYS after the insurance coverage was applied for. There was sufficient time for the private respondent to process the application and to notice that the applicant was over 60 years of age and thereby cancel the policy on that ground if it was minded to do so. If the private respondent failed to act, it is either because it was willing to waive such disqualification; or, through the negligence or incompetence of its employees for which it has only itself to blame, it simply overlooked such fact. Under the circumstances, the insurance corporation is already deemed in estoppel. Its inaction to revoke the policy despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such condition. In addition, since premiums are paid in consideration of the assumption of specified risks by insurers, and since no premium is due unless the risk attaches, if the risk insured against does not or cannot attach, or if no part of the interest is subject to any of the specified perils, the insurer cannot claim or retain the premium thus paid, in the absence of fraud or fault on the part of the insured. It would be contrary to the dictates of honesty and fair dealing to allow the insurer to treat the policy as valid long enough to get the premium on it and leave it at liberty to repudiate it the next moment. SOUTH SEA SURETY & INSURANCE CORPORATION vs CA Facts: Valenzuela Hardwood and Industrial Supply, Inc. shipped with Seven Brothers' vessel M/V Seven Ambassador lauan round logs numbering 940 at the port of Maconacon, Isabela for shipment to Manila. Valenzuela insured the logs against loss and/or, damage with South Sea Surety and Insurance Co., Inc. for P2,000,000 issuing a Marine Cargo Insurance Policy. On January 24 1984: Valenzuela gave the check in payment of the premium on the insurance policy to Mr. Victorio Chua. Then the next day, January 25 1984, M/V Seven Ambassador sank. On January 30 1984, the check was tendered to South Sea but it refused, instead it cancelled the insurance policy for non-payment of the premium. RTC favored Valenzuela against South Sea and Seven Brothers while the CA absolved Seven Brothers due to the stipulation in the charter party that the ship owner would be exempted from liability in case of loss. South Sea contends that the policy was cancelled since Mr. Chua is not authorized. ISSUE: Whether or not Mr. Chua is an authorized representative to receive the payment. . HELD: YES. Payment of the premium is a condition precedent to, and essential for, the efficaciousness of the contract. The only two statutorily provided exceptions are: (a) in case the insurance coverage relates to life or industrial life (health) insurance when a grace period applies and (b) when the insurer makes a written acknowledgment of the receipt of premium, this acknowledgment being declared by law to be then conclusive evidence of the premium payment. South Sea Surety and Insurance Co., Inc. delivered to him the policy on 21 January 1984 at his office to be delivered to the Valenzuela - deemed to have been authorized by the South Sea Surety and Insurance Co., Inc. to receive the premium. Hence, this petition is DENIED.

UCBP vs Telemart G.R. No. 137172 June 15, 1999

Facts: Insurer issued 5 fire insurance policies covering various properties of the Insured (covering the period May 22, 1991-May 22, 1992). Before the expiration of the policy (March 1992), Insurer evaluated the policy and decided not to renew them. Thus, Insurer issued a notice of non-renewal to Insureds broker Zuellig (on April 1992). After the expiration of the policy (or on June 13, 2012), fire razed Insureds property covered by 3 policies. A month later, Insured presented 5 checks to the Insurers cashier as payment for the renewal of the policy (from May 1192May 1993), however, no notice of loss was ever filed by Insured. Insurer refused to pay on the ground that the policies had already expired and were not renewed, and that the fire occurred before payment of the premium (for renewal). RTC: Insured fully complied with its duty to pay premium. CA: following previous practice, Insured was allowed a 60-90 day credit term for the renewal of its policy, and that the acceptance of the late premium payment suggested an understanding that payment could be made later, and that no timely notice of non-renewal was sent. Issue: Whether the fire insurance policies issued by Insurer to Insured had expired on May 1992 or had been extended or renewed by an implied credit arrangement (even though actual tender of payment was made after the occurrence of the fire). Held: No, the insurance policies had not been renewed. An insurance policy, other than life, issued originally or on renewal, is not valid and binding until actual payment of the premium. Any agreement to the contrary is void. The parties may not agree expressly or impliedly on the extension of creditor time to pay the premium and consider the policy binding before actual payment. Here, the payment of the premium for renewal of the policies was tendered on July 13, 1992, a month after the fire occurred on June 13, 1992. The assured did not even give the insurer a notice of loss within a reasonable time after occurrence of the fire.