Ang Giok Chip v Springfield G.R. No. L-33637 December 31, 1931J. Malcolm

Facts:Ang insured his warehouse for the total value of Php 60,000. One of these, amounting to 10,000, was with SpringfieldInsuranceCompany. His warehouse burned down, then he attempted to recover 8,000 from Springfield for the indemnity. Theinsurancecompany interposed its defense on a rider in the policy in the form of Warranty F, fixing the amount of hazardous good that can be stored in a building to be covered by theinsurance. They claimed that Ang violated the 3 percent limit by placing hazardous goods to as high as 39 percent of all the goods stored in the building. His suit to recover was granted by the trial court. Hence, this appeal.

Issue: Whether a warranty referred to in the policy as forming part of the contract ofinsuranceand in the form of a rider to theinsurance policy, is null and void because not complying with the PhilippineInsuranceAct.

Held: No. The warranty is valid. Petition dismissed.

Ratio:TheInsuranceAct, Section 65, taken from California law, states:"Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it."Warranty F, indemnifying for a value of Php 20,000 and pasted on the left margin of the policy stated:It is hereby declared and agreed that during the currency of this policy no hazardous goods be stored in the Building to which thisinsuranceapplies or in any building communicating therewith, provided, always, however, that the Insured be permitted to stored a small quantity of the hazardous goods specified below, but not exceeding in all 3 per cent of the total value of the whole of the goods or merchandise contained in said warehouse, viz; . . . .Also, the court stated a book that said, "any express warranty or condition is always a part of the policy, but, like any other part of an express contract, may be written in the margin, or contained in proposals or documents expressly referred to in the policy, and so made a part of it."It is well settled that a rider attached to a policy is a part of the contract, to the same extent and with like effect as it actually embodied therein. In the second place, it is equally well settled that an express warranty must appear upon the face of the policy, or be clearly incorporated therein and made a part thereof by explicit reference, or by words clearly evidencing such intention.The court concluded that Warranty F is contained in the policy itself, because by the contract ofinsuranceagreed to by the parties it was made to be a part. It wasnt aseparate instrument agreed to by the parties.The receipt of the policy by the insured without objection binds him. It was his duty to read the policy and know its terms. He also never chose to accept a different policy by considering the earlier one as a mistake. Hence, the rider is valid.Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-33637December 31, 1931ANG GIOK CHIP, doing business under the name and style of Hua Bee Kong Si,plaintiff-appellee,vs.SPRINGFIELD FIRE & MARINE INSURANCE COMPANY,defendant-appellant.C.A. Sobral for appellant.Paredes and Buencamino for appellee.Gibbs and McDonough and Ramon Ozaeta as amici curiae.MALCOLM,J.:An important question in the law of insurance, not heretofore considered in this jurisdiction and, according to our information, not directly resolved in California from which State the Philippine Insurance Act was taken, must be decided on this appeal for the future guidance of trial courts and of insurance companies doing business in the Philippine Islands. This question, flatly stated, is whether a warranty referred to in the policy as forming part of the contract of insurance and in the form of a rider to the insurance policy, is null and void because not complying with the Philippine Insurance Act. The court has had the benefit of instructive briefs and memoranda from the parties and has also been assisted by a well prepared brief submitted on behalf ofamici curiae.The admitted facts are these: Ang Giok Chip doing business under the name and style of Hua Bee Kong Si was formerly the owner of a warehouse situated at No. 643 Calle Reina Regente, City of Manila. The contents of the warehouse were insured with the three insurance companies for the total sum of P60,000. One insurance policy, in the amount of P10,000, was taken out with the Springfield Fire & Marine Insurance Company. The warehouse was destroyed by fire on January 11, 1928, while the policy issued by the latter company was in force.Predicated on this policy the plaintiff instituted action in the Court of First Instance of Manila against the defendant to recover a proportional part of the loss coming to P8,170.59. Four special defenses were interposed on behalf of the insurance company, one being planted on a violation of warranty F fixing the amount of hazardous goods which might be stored in the insured building. The trial judge in his decision found against the insurance company on all points, and gave judgment in favor of the plaintiff for the sum of P8,188.74. From this judgment the insurance company has appealed, and it is to the first and fourth errors assigned that we would address particular attention.Considering the result at which we arrive, it is unnecessary for us to discuss three of the four special defenses which were made by the insurance company. We think, however, that it would be a reasonable deduction to conclude that more than 3 per cent of the total value of the merchandise contained in the warehouse constituted hazardous goods, and that this per cent reached as high as 39. We place reliance on the consular invoices and on the testimony of the adjuster, Herridge. Having thus swept to one side all intervening obstacle, the legal question recurs, as stated in the beginning of this decision, of whether or not warranty F was null and void.To place this question in its proper light, we turn to the policy issued by the Springfield Fire & Marine Insurance Company in favor of the plaintiff. The description of the risk in this policy is as follows:lawphil.netTen thousand pesos Philippine Currency. On generalnon-hazardous merchandise, chiefly consisting of chucherias, also produce, Cacao, Flour, all the property of the Insured, or held by them in trust, on commission or on joint account with others, or for which he is responsible, while contained during the currency of this policy in the godown, situate No. 643 Calle Reina Regent. . . .This policy is subject to the hereon attached "Ordinary Short Period Rate Scale"Warranties A & F, Co-insurances Clause "and Three Fourths Loss Clause,"which are forming part of same. Co-insurance declared:"P20,000. Sun Insurance Office Ltd. (K & S)." (Emphasis inserted.) Securely pasted on the left hand margin of the face of the policy are five warranties and special clauses. One of them is warranty F, specially referred to on the face of the policy, reading in part as follows:WARRANTY FIt is hereby declared and agreed that during the currency of this policy no hazardous goods be stored in the Building to which this insurance applies or in any building communicating therewith, provided, always, however, that the Insured be permitted to stored a small quantity of the hazardous goods specified below, but not exceeding in all 3 per cent of the total value of the whole of the goods or merchandise contained in said warehouse, viz; . . . .The applicable law is found in the Instance Act, Act No. 2427, as amended, section 65 reading:

"Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it." As the Philippine law was taken verbatim from the law of California, in accordance with well settled canons of statutory construction, the court should follow in fundamental points, at least, the construction placed by California courts on a California law. Unfortunately the researches of counsel reveal no authority coming from the courts of California which is exactly on all fours with the case before us. However, there are certain consideration lying at the basis of California law and certain indications in the California decisions which point the way for the decision in this caseSection 65 of the Philippine Insurance Act corresponds to section 2605 of the Civil Cod of California. The comments of the Code Examiners of California disclose that the language of section 2605 was quite different from that under the Code as adopted in 1872. That language was found too harsh as to insurance companies. The Code Examiners' notes state: "The amendment restores the law as it existed previous to the Code:SeeParsons on Maritime Law, 106, and Phillips on Insurance, sec. 756." The passage referred to in Philips on Insurance, was worded by the author as follows:"Any express warranty or condition is always a part of the policy, but, like any other part of an express contract, may be written in the margin, or contained in proposals or documents expressly referred to in the policy, and so made a part of it." The annotator of the Civil Code of California, after setting forth these facts, adds:. . . The section as it now reads is in harmony with the rule that a warranty may be contained in another instrument than the policy when expressly referred to in the policy as forming a part thereof: . . . .What we have above stated has been paraphrased from the decision of the California Court of Appeals in the case of Isaac Upham Co.vs. United States Fidelity & Guaranty Co. ( [1922], 211 Pac., 809), and thus discloses the attitude of the California courts. Likewise in the Federal courts, in the case of Connervs. Manchester Assur. Co. ([1904], 130 Fed., 743), section 2605 of the Civil Code of California came under observation, and it was said that it "is in effect an affirmance of the generally accepted doctrine applicable to such contracts."We, therefore, think it wrong to hold that the California law represents a radical departure from the basic principles governing the law of insurance. We are more inclined to believe that the codification of the law of California had exactly the opposite purpose, and that in the language of the Federal court it was but an affirmance of the generally accepted doctrine applicable to such contracts. This being true, we turn to two of such well recognized doctrines. In the first place, it is well settled that a rider attached to a policy is a part of the contract, to the same extent and with like effect as it actually embodied therein. (I Couch, Cyclopedia of Insurance Law, sec. 159.) In the second place, it is equally well settled that an express warranty must appear upon the face of the policy, or be clearly incorporated therein and made a part thereof by explicit reference, or by words clearly evidencing such intention. (4 Couch, Cyclopedia of Insurance Law, sec. 862.)Section 65 of the Insurance Act and its counterpart, section 265 of the Civil Code of California, will bear analysis as tested by reason and authority. The law says that every express warranty must be "contained in the policy itself." The word "contained," according to the dictionaries, means "included," inclosed," "embraced," "comprehended," etc. When, therefore, the courts speak of a rider attached to the policy, and thus "embodied" therein, or of a warranty "incorporated" in the policy, it is believed that the phrase "contained in the policy itself" must necessarily include such rider and warranty. As to the alternative relating to "another instrument," "instrument" as here used could not mean a mere slip of paper like a rider, but something akin to the policy itself, which in section 48 of the Insurance Act is defined as "The written instrument, in which a contract of insurance is set forth." In California, every paper writing is not necessarily an "instrument" within the statutory meaning of the term. The word "instrument has a well defined definition in California, and as used in the Codes invariably means some written paper or instrument signed and delivered by one person to another, transferring the title to, or giving a lien, on property, or giving a right to debt or duty. (Hoagvs. Howard [1880], 55 Cal., 564; Peoplevs. Fraser[1913], 137 Pac., 276.) In other words, the rider, warranty F, is contained in the policy itself, because by the contract of insurance agreed to by the parties it is made to form a part of the same, but is not another instrument signed by the insured and referred to in the policy as forming a part of it.Again, referring to the jurisprudence of California, another rule of insurance adopted in that State is in point. It is admitted that the policy before us was accepted by the plaintiff. The receipt of this policy by the insured without objection binds both the acceptor and the insured to the terms thereof. The insured may not thereafter be heard to say that he did not read the policy or know its terms, since it is his duty to read his policy and it will be assumed that he did so. In California Jurisprudence, vol. 14, p. 427, from which these statements are taken with citations to California decisions, it is added that it has been held that where the holder of a policy discovers a mistake made by himself and the local agent in attaching the wrong rider to his application, elects to retain the policy issued to him, and neither requests the issuance of a different one nor offers to pay the premium requisite to insure against the risk which he believe the rider to cover, he thereby accepts the policy.We are given to understand, and there is no indication to the contrary, that we have here a standard insurance policy. We are further given to understand, and there is no indication to the contrary, that the issuance of the policy in this case with its attached rider conforms to well established practice in the Philippines and elsewhere. We are further given to understand, and there is no indication to the contrary, that there are no less than sixty-nine insurance companies doing business in the Philippine Islands with outstanding policies more or less similar to the one involved in this case, and that to nullify such policies would place an unnecessary hindrance in the transaction of insurance business in the Philippines. These are matters of public policy. We cannot believe that it was ever the legislative intention to insert in the Philippine Law on Insurance an oddity, an incongruity, entirely out of harmony with the law as found in other jurisdiction, and destructive of good business practice.We have studied this case carefully and having done so have reached the definite conclusion that warranty F, a rider attached to the face of the insurance policy, and referred to in contract of insurance, is valid and sufficient under section 65 of the Insurance Act. Accordingly, sustaining the first and fourth errors assigned, and it being unnecessary to discuss the remaining errors, the result will be to reverse the judgment appealed from and to order the dismissal of the complaint, without special pronouncement as to costs in either instance.Street, Villamor, Ostrand, and Romualdez, JJ., concur.Separate Opinions

VILLA-REAL,J.,dissenting:I fully concur in the dissenting opinion penned by Justice Imperial, and further say that a rider or slip attached to an insurance policy, though referred to therein as making a part of it, is not one of the forms prescribed by section 65 of the Insurance Law in which an express warranty may be made to appear validly so as to be binding between the insurer and the insured. There are two, and only two forms provided in said section by which an express warranty may be made to appear validly, to wit: by embodiment either in the insurance policy itself or in another instrument signed by the insured and referred to in the policy as making a part of it.Now the question arises as to whether the rider or slip containing said warranty F attached to the policy in question and referred to therein as making a part thereof is one of the two forms provided in said section 65 of the Insurance Law.It is admitted that it is not the second form, because not being signed by the insured it does not constitute an instrument. (Hoagvs. Howard [1880], 55 Cal., 564; Peoplevs. Fraser [1913], 137 Pac., 276.)Is it the first form required by law, that is, is it contained in the policy itself? It is so contended in the majority opinion and authorities are cited in support of such contention.In 1 Couch, Cyclopedia of Insurance Law, par. 159, it is said that "as a general rule, a rider or slip attached to a policy or certificate of insurance is,prima facieat least, a part of the contract to the same extent, and with like effect, as if actually embodied therein, provided, of course, that it does not violate any statutory inhibition, and has been lawfully, and sufficiently attached, ..." (See also32 Corpus Juris, 1159, par. 270).Does the attachment of a rider or slip containing an express warranty contravene the provisions of section 65 of the Insurance Law? When the law, in order to protect the insured, requires that an express warranty be contained in the policy or in another instrument referred to therein as making a part thereof, it could not have been its intention to permit that such express warranty be contained in a piece of paper not signed by the insured although it is attached to the policy and referred to therein as making a part thereof, because it would be contrary to the requirement that such express warranty be contained in an instrument signed by the insured. It is a general rule of statutory construction that a law should not be so construed as to produced an absurd result. It would certainly be an absurdity if section 65 of the Insurance Law were construed as requiring that an express warranty be contained only in the policy or in another instrument signed by the insured and referred to therein as making a part thereof for the protection of such insured, and at the same time pertaining that such, express warranty be contained in a piece of paper not signed by the insured but simply attached to the policy and referred to therein as making a part thereof, thus opening the door to fraud, it being easy to detach such rider or slip and change it with another, which is precisely what the law is trying to prevent. It will thus be seen that the attachment of a rider or slip containing an express warranty to a policy, although referred to therein as making a part thereof, is contrary to the evident intent and purpose of section 65 of the Insurance Law.In the case of Isaac Upham Co.vs. United States Fidelity & Guaranty Co. (211 Pac., 809), cited in the majority opinion, the question was whether a warranty contained in an application for insurance, which was not referred to in the policy as making a part thereof, incorporated said warranty in the said policy and was valid. The Supreme Court of California held that it was not, for lack of such reference. Of course an application for insurance is a document signed by the insured, and an express warranty contained therein if referred to in the policy as making a part thereof, will be considered as contained therein in accordance with law.In the case of Connervs. Manchester Assur. Co. (130 Feb., 743), also cited in the majority opinion, the question was whether an open policy was a warranty and the Circuit Court of Appeals for the Northern District of California held that it was not, and further said that "section 2605 of the Civil Code of California (from which section 65 of the Insurance Law was taken) was evidently intended to express in statutory form the rule that no express warranty made by the insured shall affect the contract of insurance, unless it be contained in the policy or in the application, or some other instrument signed by the insured and made a part of the contract, and is in effect an affirmance of the generally accepted doctrine applicable to such contracts." It will be seen from this statement that the court in enumerating the forms in which an express warranty may be express or made to appear does not mention any paper which is not signed by the insured.The fact that for many years it has been the practice of the insurance companies to use riders or slips of paper containing express warranties without the signature of the insured in violation of the law is no reason why such practice should be permitted to continue when its legality is questioned.In view of the foregoing consideration, I am constrained to dissent from the opinion of the majority.IMPERIAL,J.,dissenting:The decision of this case depended principally, but wholly, on the validity of the warranty F, Exhibit A-2. This instrument consist of a slip of paper pasted on the margin of a page of the fire insurance policy. It contains the stipulation that the insured is permitted to store in the building concerned the hazardous goods specified, to an amount not exceeding three per cent of the total value of the merchandise stored. The policy makes reference to this rider as follows: "This policy is subject to the hereon attached `Ordinary Short Period Rate Scale,' Warranties A and F, Co-insurance clause and `Three Fourths Loss Clause' which are forming part of the same"; but the rider is not signed by the insured.Section 65 of Act No. 2427 (Insurance Law) reads as follows:Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it.An express warranty, then, made at or before the execution of the policy, like warranty F, is valid only if it is contained in the policy itself, or in another instrument signed by the insured and referred to in the policy as forming a part thereof. Examining warranty F, it may be seen that it does not form an integral part of the policy but appeals on another slip of paper pasted on the policy; it is therefore an instrument other than the policy and comes under the second paragraph provided for in section 65. And, according to this provision, warranty F cannot be valid or binding, for the simple reason that it is not signed by the insured, and has no weight, notwithstanding the fact that reference is made to it in a general way in the body of the policy. This reference is not equivalent to including it in the policy, for the simple reason, as we have said, that it was made in a general way. It is mentioned simply as warranty F, without giving any idea of its contents. The term of the rider might be changed and the heading "Warranty F" retained, and, following the appellant's line of reasoning, it might, with equal plausibility, be defended as the express warranty agreed upon, because it was headed "Warranty F." It is just such alterations as this that the law seeks to prevent in requiring that all warranties of the kind are to be signed by the insured and referred to in the policy.Setting aside for the moment the legal question of the validity of the warranty, and assuming warranty F to be valid, we have to consider another circumstance which indicates that the insured did not violate it. The trial court found that at the time of the fire, the inflammable goods in the warehouse or building of the insured did not exceed the amount permitted by the insurance company, that is, three per cent of the total value of the merchandise stored. This finding is borne out by the evidence, and there is no reason for changing it and making another.For these reasons, I believe the judgment appealed from should be affirmed in its entirely.Avancea, C.J., concurs.

Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISIONG.R. No. L-28501 September 30, 1982PEDRO ARCE,plaintiff-appellee,vs.THE CAPITAL INSURANCE & SURETY CO., INC.,defendant-appellant.ABAD SANTOS,J.:In Civil Case No. 66466 of the Court of First Instance of Manila, the Capital Insurance and Surety Co., Inc., (COMPANY) was ordered to pay Pedro Arce (INSURED) the proceeds of a fire insurance policy. Not satisfied with the decision, the company appealed to this Court on questions of law.The INSURED was the owner of a residential house in Tondo, Manila, which had been insured with the COMPANY since 1961 under Fire Policy No. 24204. On November 27, 1965, the COMPANY sent to the INSURED Renewal Certificate No. 47302 to cover the period December 5, 1965 to December 5, 1966. The COMPANY also requested payment of the corresponding premium in the amount of P 38.10.Anticipating that the premium could not be paid on time, the INSURED, thru his wife, promised to pay it on January 4, 1966. The COMPANY accepted the promise but the premium was not paid on January 4, 1966. On January 8, 1966, the house of the INSURED was totally destroyed by fire.On January 10, 1966, INSURED's wife presented a claim for indemnity to the COMPANY. She was told that no indemnity was due because the premium on the policy was not paid. Nonetheless the COMPANY tendered a check for P300.00 as financial aid which was received by the INSURED's daughter, Evelina R. Arce. The voucher for the check which Evelina signed stated that it was "in full settlement (ex gratia) of the fire loss under Claim No. F-554 Policy No. F-24202." Thereafter the INSURED and his wife went to the office of the COMPANY to have his signature on the check Identified preparatory to encashment. At that time the COMPANY reiterated that the check was given "not as an obligation, but as a concession" because the renewal premium had not been paid, The INSURED cashed the check but then sued the COMPANY on the policy.The courta quoheld that since the COMPANY could have demanded payment of the premium, mutuality of obligation requires that it should also be liable on its policy. The courta quoalso held that the INSURED was not bound by the signature of Evelina on the check voucher because he did not authorize her to sign the waiver.The appeal is impressed with merit.The trial court cited Capital Insurance and Surety Co., Inc. vs. Delgado, L-18567, Sept. 30, 1963, 9 SCRA 177, to support its first proposition. In that case, this Court said:On the other hand, the preponderance of the evidence shows that appellee issued fire insurance policy No. C-1137 in favor of appellants covering a certain property belonging to the latter located in Cebu City; that appellants failed to pay a balance of P583.95 on the premium charges due, notwithstanding demands made upon them. As with the issuance of the policy to appellants the same became effective and binding upon the contracting parties, the latter can not avoid the obligation of paying the premiums agreed upon. In fact, appellant Mario Delgado, in a letter marked in the record as Exhibit G, expressly admitted his unpaid account for premiums and asked for an extension of time to pay the same. It is clear from the foregoing that appellants are under obligation to pay the amount sued upon. (At p. 180.)Upon the other hand, Sec. 72 of the Insurance Act, as amended by R.A. No. 3540 reads:SEC. 72. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the perils insured against, unless there is clear agreement to grant credit extension for the premium due. Nopolicy issued by an insurance company is valid and binding unless and until the premium thereof has been paid "(Italics supplied.) (p. 11, Appellant's Brief.)Morever, the parties in this case had stipulated:IT IS HEREBY DECLARED AND AGREED that not. withstanding anything to the contrary contained in the within policy, this insurance will be deemed valid and binding upon the Company only when the premium and documentary stamps therefor have actually been paid in full and duly acknowledged in an official receipt signed by an authorized official/representative of the Company, " (pp. 45-46, Record on Appeal.)It is obvious from both the Insurance Act, as amended, and the stipulation of the parties that time is of the essence in respect of the payment of the insurance premium so that if it is not paid the contract does not take effect unless there is still another stipulation to the contrary. In the instant case, the INSURED was given a grace period to pay the premium but the period having expired with no payment made, he cannot insist that the COMPANY is nonetheless obligated to him.It is to be noted thatDelgadowas decided in the light of the Insurance Act before Sec. 72 was amended by the addition of the underscored portion,supra, Prior to the amendment, an insurance contract was effective even if the premium had not been paid so that an insurer was obligated to pay indemnity in case of loss and correlatively he had also the right to sue for payment of the premium. But the amendment to Sec. 72 has radically changed the legal regime in that unless the premium is paid there is no insurance.With the foregoing, it is not necessary to dwell at length on the trial court's second proposition that the INSURED had not authorized his daughter Evelina to make a waiver because the INSURED had nothing to waive; his policy ceased to have effect when he failed to pay the premium.We commiserate with the INSURED. We are wen aware that many insurance companies have fallen into the condemnable practice of collecting premiums promptly but resort to all kinds of excuses to deny or delay payment of just claims. Unhappily the instant case is one where the insurer has the law on its side.WHEREFORE, the decision of the courta quois reversed; the appellee's complaint is dismissed. No special pronouncement as to costs.SO ORDERED.Barredo (Chairman), Aquino, Concepcion, Jr., Guerrero, De Castro and Escolin, JJ., concur.

Insurance Case Digest: Capital Insurance & Surety Co. Inc. V. Plastic Era Co. Inc (1975)G.R.No. L-22375 July 18, 1975Lessons Applicable:Estoppel and credit extension (Insurance)Laws Applicable:Article 1249 of the New Civil Code

FACTS: December 17, 1960:Capital Insurance & Surety Co., Inc.delivered to the respondentPlasticEra Manufacturing Co., Inc.its open Fire Policyinsuring itsbuilding, equipments, raw materials, productsand accessories located at Sheridan Street, Mandaluyong, Rizal betweenDecember 15, 1960 1 pm -December 15, 1961 1 pm up toP100,000 butPlasticEra did not pay the premium January 8, 1961:PlasticEra delivered to Capital Insurance its partial payment through checkP1,000postdated January 16, 1961 February 20, 1961:Capital Insurance tried to deposit the check but it was dishonored due to lack of funds. According tothe records, onJanuary 19, 1961PlasticEra has had a bank balance ofP1,193.41 January 18, 1961:PlasticEra's properties weredestroyed by fireamounting to a loss ofP283,875. The property was also insured toPhilamgen Insurance Company for P200K. Capital Insurance refusedPlasticEra's claim for failing to paythe insurancepremium CFI: favored Capital Insurance CA: affirmedISSUE: W/N there was a valid insurance contract because there was an extention of credit despite failing to encash the check payment

HELD: YES. Affirmed Article 1249 of the New Civil Code The delivery ofpromissory notespayable to order, or bills of exchange or other mercantile documents shall producethe effectof payment only when they have been cashed, or when through the fault of the creditor they have been impaired Capital Insurance accepted the promise ofPlasticEra to paythe insurancepremium within 30 days from the effective date of policy.Considering thatthe insurancepolicy is silent as to the mode of payment, Capital Insurance is deemed to have accepted thepromissory notein payment of the premium.This rendered the policy immediately operative onthe dateit was delivered. By accepting its promise to paythe insurancepremium within thirty (30) days from the effectivity date of the policy December 17, 1960 Capital Insurance had in effectextended credittoPlasticEra. Where credit is given by an insurance company for the payment of the premium it has no right to cancel the policy for nonpayment except by putting the insured in default and giving him personal notice Having held the check for such an unreasonable period of time, Capital Insurance was estopped from claiming a forfeiture of its policy for non-payment even if the check had been dishonored later.

Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. L-22375 July 18, 1975THE CAPITAL INSURANCE & SURETY CO., INC.,petitioner,vs.PLASTIC ERA CO., INC., AND COURT OF APPEALS,respondents.Salcedo, Del Rosario, Bito, Misa and Lozada for petitioner.K.V. Faylona for Private respondent.MARTIN,J.:Petition for review of a decision of the Court of Appeals affirming the decision of the Court of First Instance of Manila in Civil Case No. 47934 entitled "Plastic Era Manufacturing Co., Inc. versus The Capital Insurance and Surety Co., Inc."On December 17, 1960, petitioner Capital Insurance & Surety Co., Inc. (hereinafter referred to as Capital Insurance) delivered to the respondent Plastic Era Manufacturing Co., Inc., (hereinafter referred to as Plastic Era) its open Fire Policy No. 227601wherein the former undertook to insure the latter's building, equipments, raw materials, products and accessories located at Sheridan Street, Mandaluyong, Rizal. The policy expressly provides that if the property insured would be destroyed or damaged by fire after the payment of the premiums, at anytime between the 15th day of December 1960 and one o'clock in the afternoon of the 15th day of December 1961, the insurance company shall make good all such loss or damage in an amount not exceeding P100,000.00. When the policy was delivered, Plastic Era failed to pay the corresponding insurance premium. However, through its duly authorized representative, it executed the following acknowledgment receipt:This acknowledged receipt of Fire Policy) NO. 22760 Premiumx x x x x) (I promise to pay)(P2,220.00) (has been paid)THIRTY DAYS AFTER on effective date ---------------------(Date)On January 8, 1961, in partial payment of the insurance premium, Plastic Era delivered to Capital Insurance, a check2for 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. In due time, the latter notified Capital Insurance of the loss of the insured property by fire3and accordingly filed its claim for indemnity thru the Manila Adjustment Company.4The 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.On August 25, 1961, Plastic Era filed its complaint against Capital Insurance for the recovery of the sum of P100,000.00 plus P25,000.00 for attorney's fees and P20,000.00 for additional expenses. Capital Insurance filed a counterclaim of P25,000.00 as and for attorney's fees.On November 15, 1961, the trial court rendered judgment, the dispositive portion of which reads as follows:WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant for the sum of P88,325.63 with interest at the legal rate from the filing of the complaint and to pay the costs.From said decision, Capital Insurance appealed to the Court of Appeals.On December 5, 1963, the Court of Appeals rendered its decision affirming that of the trial court. Hence, this petition for review bycertiorarito this Court.Assailing the decision of the Court of Appeals petitioner assigns the following errors, to wit:1. THE COURT OF APPEALS ERRED IN SENTENCING PETITIONER TO PAY PLASTIC ERA THE SUM OF P88,325.63 PLUS INTEREST, AND COST OF SUIT, ALTHOUGH PLASTIC ERA NEVER PAID PETITIONER THE INSURANCE PREMIUM OF P2,220.88.2. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SHOULD HAVE INSTITUTED AN ACTION FOR RESCISSION OF THE INSURANCE CONTRACT ENTERED INTO BETWEEN IT AND PLASTIC ERA BEFORE PETITIONER COULD BE RELIEVED OF RESPONSIBILITY UNDER ITS FIRE INSURANCE POLICY.3. WE HAVE SHOWN ABOVE THAT PLASTIC ERA'S ACTION WAS UNWARRANTED AND THAT THE PETITIONER SHOULD HAVE BEEN ABSOLVED FROM THE COMPLAINT, AND CONSEQUENTLY, THE LOWER COURT SHOULD HAVE AWARDED PETITIONER A REASONABLE SUM AND AS ATTORNEY'S FEES P25,000.00.The pivotal issue in this petition is whether or not a contract of insurance has been duly perfected between the petitioner, Capital Insurance, and respondent Plastic Era. Necessarily, the issue calls for a correct interpretation of the insurance policy which states:This Policy of Insurance Witnesseth That in consideration ofPLASTIC ERA MANUFACTURING COMPANY, INC. hereinafter called the Insured, paying to the Capital Insurance & Surety Co., Inc., hereinafter called the Company, the sum of PESOS TWO THOUSAND ONE HUNDRED EIGHTY EIGHT the premium for the first period hereinafter mentioned, for insuring against Loss or Damage by only Fire or Lightning, as hereinafter appears, the Property hereinafter described and contained, or described herein and not elsewhere, in the several sums following namely: PESOS ONE HUNDRED THOUSAND ONLY, PHILIPPINE CURRENCY; ... THE COMPANY HEREBY AGREES with the Insured but subject to the terms and conditions endorsed or otherwise expressed hereon, which are to be taken as part of this Policy), that if the Property described, or any part thereof, shall be destroyed or damaged by Fire or Lightningafter payment of the Premiums, at anytime between the 15th day of December One Thousand Nine Hundred and Sixty and 1 'clock in the afternoon of the 15th day of December One Thousand Nine Hundred and Sixty-One of the last day of any subsequent period in respect of which the insured, or a successor in interest to whom the insurance is by an endorsement hereon declared to be or is otherwise continued, shall pay to the Company and the Company shall accept the sum required for the renewal of this Policy, the Company will pay or make good all such loss or Damage, to an amount not exceeding during any one period of the insurance in respect of the several matters specified, the sum; set opposite thereto respectively, and not exceeding the whole sum of PESOS, ONE HUNDRED THOUSAND ONLY, PHIL. CUR....In clear and unequivocal terms the insurance policy provides that it is only upon payment of the premiums by Plastic Era that Capital Insurance agrees to insure the properties of the former against loss or damage in an amount not exceeding P100,000.00.The crux of the problem then is whether at the time the insurance policy was delivered to Plastic Era on December 17, 1960, the latter was able to pay the stipulated premium. It appears on record that on the day the insurance policy was delivered, Plastic Era did not pay the Capital Insurance, but instead executed an acknowledgment receipt of Policy No. 22760. In said receipt Plastic Era promised to pay the premium within thirty (30) days from the effectivity date of the policy on December 17, 1960 and Capital Insurance accepted it. What then is the effect of accepting such acknowledgment receipt from the Plastic Era? Did the Capital Insurance mean to agree to make good its undertaking under the policy if the premium could be paid on or before January 16, 1961? And what would be the effect of the delivery to Capital Insurance on January 8, 1961 of a postdated check (January 16, 1961) in the amount of P1,000.00, payable to the order of the latter? Could not this have been considered a valid payment of the insurance premium? Pursuant to Article 1249 of the New Civil Code:xxx xxx xxxThe delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired.xxx xxx xxxIn the meantime, the action derived from the original obligation shall be held in abeyance.Under this provision the mere delivery of a bill of exchange in payment of a debt does not immediately effect payment. It simply suspends the action arising from the original obligation in satisfaction of which it was delivered, until payment is accomplished either actually or presumptively.5Tender of draft or check in order to effect payment that would extinguish the debtor's liability should be actually cashed.6If the delivery of the check of Plastic Era to Capital Insurance were to be viewed in the light of the foregoing, no payment of the premium had been effected, for it is only when the check is cashed that it is said to effect payment.Significantly, in the case before Us the 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 view taken in most cases in the United States:... is that although one of conditions of an insurance policy is that "it shall not be valid or binding until the first premium is paid", if it is silent as to the mode of payment, promissory notes received by the company must be deemed to have been accepted in payment of the premium. 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 ...7Precisely, this was what actually happened when the Capital Insurance accepted the acknowledgment receipt of the Plastic Era promising to pay the insurance premium within thirty (30) days from December 17, 1960. Hence, when the damage or loss of the insured property occurred, the insurance policy was in full force and effect. 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.In the absence of express agreement or stipulation to that effect in the policy, the non-payment at maturity of a note given for and accepted as premium on a policy does not operate to forfeit the rights of the insured even though the note is given for an initial premium, nor does the fact that the collection of the note had been enjoined by the insured in any way affect the policy.8... If the check is accepted as payment of the premium even though it turns out to be worthless, there is payment which will prevent forfeiture.9By accepting its promise to pay the insurance premium within thirty (30) days from the effectivity date of the policy December 17, 1960 Capital Insurance had in effect extended credit to Plastic Era. 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.10It did not have the right to cancel the policy for nonpayment of the premium except by putting Plastic Era in default and giving it personal notice to that effect. This Capital Insurance failed to do.... Where credit is given by an insurance company for the payment of the premium it has no right to cancel the policy for nonpayment except by putting the insured in default and giving him personal notice....11On the contrary Capital Insurance had accepted a check for P1,000.00 from Plastic Era in partial payment of the premium on the insurance policy. Although the check was due for payment on January 16, 1961 and Plastic Era had sufficient funds to cover it as of January 19, 1961, Capital Insurance decided to hold the same for thirty-five (35) days before presenting it for payment. Having held the check for such an unreasonable period of time, Capital Insurance was estopped from claiming a forfeiture of its policy for non-payment even if the check had been dishonored later.1wph1.tWhere the check is held for an unreasonable time before presenting it for payment, the insurer may be held estopped from claiming a forfeiture if the check is dishonored.12Finally, it is submitted by petitioner that:We are here concerned with a case of reciprocal obligations, and respondent having failed to comply with its obligation to pay the insurance premium due on the policy within thirty days from December 17, 1960, petitioner was relieved of its obligation to pay anything under the policy, without the necessity of first instituting an action for rescission of the contract of insurance entered into by the parties.But precisely in this case, Plastic Era has complied with its obligation to pay the insurance premium and therefore Capital Insurance is obliged to make good its undertaking to Plastic Era.WHEREFORE, finding no reversible error in the decision appealed from, We hereby affirm the samein toto. Costs against the petitioner.SO ORDERED.Castro, Makasiar, Esguerra and Muoz Palma, JJ., concur.Teehankee, J., is on leave.Footnotes1 Exhibit "A"2 Exhibit 4.3 Exhibit 1.4 Exhibit 2.5 U.S. vs. Badoya, 14 Phil. 397.6 Hidalgo et al. vs. Tuazon, Inc., 101 Phil. 363.7 Sec. 409, 29 Am. Jur., p. 346.8 Hodgson v. Marine Ins. Co. (U.S.) 5 Cranch 100, 3 L Ed. 48; Massachusetts Ben L. Asso. v. Robinson, 104 Ga 256, 30 SE 918; Union Trust Co. v. Chicago Nat. L. Ins. Co., 267 Ill. App. 470; Iner-Southern L. Ins. Co. v. Duff, 184 Ky 227, 211 SW 738; Trade Ins. Co. v. Barracliff, 45 NJL 543; Arkansas Ins. Co. v. Cox, 21 Okla. 873, 98 P 552; 43 Am Jur 2d p. 633.9 29 Am. Jur. p. 342.10 29-A Am. Jur. New "Insurance", Sec. 587, op. 882 n2; 29-A Am. Jur. New "Insurance", Sec. 1541, p. 645 n20.11 Fernum v. Phoenix Ins. Co., 83 Cal. 246, 23 p. 869; 43 Am. Jur. p. 579.12 Dulberg v. Equitable Life Assur. Soc. 277 NY 17, 12 NE 2d 238; 43 Am. Jur. 2d p. 1059.

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-33131December 13, 1930EMILIO GONZALES LA O,plaintiff-appellee,vs.THE YEK TONG LIN FIRE AND MARINE INSURANCE CO., LTD.,defendant-appellant.Araneta and Zaragosa for appellant.Feria and La O for appellee.VILLAMOR,J.:This is an action to recover of the defendant the Yek Tong Lin Fire & Marine Insurance Co., Ltd., the amount of two insurance policies totaling P100,000 upon leaf tobacco belonging to the plaintiff, which was damaged by the fire that destroyed the building on Soler Street No. 188, where said tobacco was stored, on January 11, 1928.The defendant filed a general and specific denial of each and every allegation of the complaint, set up three special defenses, and prayed to be absolved from the complaint with costs against the plaintiff.After the case was tried, the court below rendered judgment as follows:In this case and in Nos. 334568, and 33480 of this court, which, by agreement of the interested parties, were jointly tried, the plaintiff demands P290,000 from the defendant assurance companies, alleging that to be the amount of the insurance on his leaf tobacco which was damaged by the fire that destroyed the warehouse at No. 188 Soler Street, Manila, where it was stored, on January 11, 1928, the plaintiff's claim against the herein defendant, the Yek Tong Lin Fire & Marine Insurance Co. being for P100,000, and against the defendants in the three other cases mentioned above, for P190,000.After the plaintiff had presented his evidence, the defendant companies in cases Nos. 33458, 33868, and 33480, offered to compromise with him by paying eighty-five per cent of his claim against them. In view of the fact that said defendants had in their answer raised the question of warranties A and G of the plaintiff's policies, providing that the building used for the effects insured would not be occupied by any other lessee, nor would be used for the deposit of other goods, without the consent of said defendants, and inasmuch as the latter alleged in their answer that the owner of the burnt building had leased the warehouse to several persons for the storage of sundry articles, the plaintiff had to accept the proposed compromise, and in consequence thereof, the three cases aforesaid were dismissed.The present case followed the usual course of procedure because the plaintiffs refused to accept the compromise which, in the same terms as those made by the defendants in the three cases mentioned, was proposed to him by the defendant the Yek Tong Lin Fire & Marine Insurance Company, the plaintiff contending that said defendant did not, nor could, raise the question of warranties A and G heretofore mentioned for the simple reason that it was the defendant itself, as owner, who had leased the building which later was destroyed by fire, to another person after having already ceded a portion of it to said plaintiff.The only question to be determined, having been raised in the defendant's answer both parties agreeing that the plaintiff insured his leaf tobacco with the defendant assurance company, and that said goods were damaged by the fire which destroyed the warehouse where they were stored, on January 11, 1928 is whether said goods were worth what the plaintiff claims, that is, about equal to the amount for which they were insured in the four above mentioned assurance companies, including the defendant in this case.The plaintiff has conclusively shown by the Official Register Book (Exhibit 1) and the Official Guide (Exhibit J), furnished by the Bureau of Internal Revenue, and kept under the supervision thereof in the usual form, in accordance with articles 10, 34 to 38 of the Regulations of the same promulgated under No. 17, by the Secretary of Finance; the Stock Book for recording the quantity of tobacco, Exhibit K, kept by the plaintiff and presented as part of the testimony of witnesses Claveria, Bonete, and Leoncio Jose; the testimony of Estanislao Lopez, Inspector of Internal Revenue, and the latter's report (Exhibit N), submitted to the Collector of Internal Revenue in pursuance of article 33 of the aforementioned Regulations; the tobacco invoices of stock damaged by the fire, Exhibits L and L-1 to L-20; and by the testimony of Clemente Uson who went over the plaintiff's books as auditor and public accountant, and also prepared Exhibits T and U, attached to the record, that the plaintiff had in the warehouse at No. 188 Soler at the time of the fire, not less, but rather more, than 6,200 bales of leaf tobacco worth over P300,000, which is of course more than the sum total of all the insurances taken out with the defendant herein and the defendants in the three aforementioned cases Nos. 33458, 33868, and 33480.lawphi1>netThe reason why the entry showing that 258 bales of tobacco had been removed from the warehouse, appearing in the Official Register Book, Exhibit I, was not posted in the Stock Book, Exhibit K, has been satisfactorily explained by the plaintiff's witnesses, who stated that it was due to the fact that there was no time to post it in the Stock Book, because the fire took place and the plaintiff told them not to touch, and to make no further entries in the books. Witness White, the defendant company's adjuster, who carefully examined then plaintiff's books not only immediately after the fire, but also during the hearing of this case, seems not to have found any irregularity therein; at least he said nothing on the point when he took the witness stand. On the contrary, in his report Exhibit UU sent to the defendant herein in his capacity as adjuster, appointed by the latter, and in Exhibits WW and XX, admitted by the Yek Tong Lin Ins. Co., Ltd., he admitted that the leaf tobacco belonging to the plaintiff in the warehouse when the fire took place exceeded, in quantity and value, the amount of the insurance.The defendant did not present evidence to rebut the plaintiff's evidence, but only presented witness Rowlands, whose testimony or opinion as to the probable number of bales of tobacco in the warehouse at the date of the fire does not deserve serious consideration, not only because of the plaintiff's evidence, but because his opinion or estimate is based solely upon photographs of the place taken after the fire.In view of the foregoing, the court hereby sentences the defendant the Yek Tong Lin Fire and Marine Insurance Company, Ltd., to pay the plaintiff Emilio Gonzales La O, the amount of one hundred thousand pesos (P100,000), for which it had accepted the insurance on the leaf tobacco belonging to said plaintiff, damaged by the fire which destroyed the warehouse at No. 188 Soler Street, where it was stored, on January 11, 1928, and legal interest upon said amount from June 27, 1928, when the complaint was filed in this case, plus the costs.So ordered.Manila, P. I., this 24th day of December, 1929.ANACLETO DIAZJudge.

The defendant duly appealed from this judgment, alleging that the trial court erred in making reference to the settlement arrived at by the plaintiff and other insurance companies, and in declaring that the only question involved in the case is whether or not the tobacco damaged by the fire is worth at least P290,000.There is no merit in these assignments of error. Since the settlement between the plaintiff and the other defendant companies was reached after the plaintiff had presented his evidence, and as those three cases were tried jointly with the instant case, there is no valid reason why the trial court should not refer to it in deciding this case. Furthermore, the court's holding here assigned as error, granting there were other incidental matters to be decided by the court, does not in itself constitute a reversible error.In the third assignment of error, the defendant contends that the plaintiff cannot recover under the policy as he has failed to prove that the Bank of the Philippine Islands, to whom the policy was made payable, no longer has any rights and interests in it. It should be noted that the defendant did not in its answer allege defect of parties plaintiff, and, besides, it does not appear that the plaintiff ceded to the bank all his rights or interests in the insurance, the note attached to the policies merely stating: "There shall be paid to the Bank of the Philippine Islands an indemnity for any loss caused by fire, according to the interest appearing in its favor." And the fact that the plaintiff himself presented in evidence the policies mortgaged to the Bank of the Philippine Islands gives rise to the presumption that the debt thus secured has been paid, in accordance with article 1191 of the Civil Code.Corpus Juris, volume 26, pages 483et seq., states:Insured, being the person with whom the contract was made, is primarily the proper person to bring suit thereon. Subject to some exceptions, insured may thus sue, although the policy is taken wholly or in part for the benefit of another person named or unnamed, and although it is expressly made payable to another as his interest may appear or otherwise. Although a policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to him, yet the mortgagor may sue thereon in his own name, especially where the mortgagee's interest is less than the full amount recoverable under the policy, . . . .And in volume 33, page 82, of the same work, we read the following:Insured may be regarded as the real party in interest, although he has assigned as collateral security any judgment he may obtain.It is also contended that the trial court erred in not declaring that in as much as the plaintiff failed to notify the defendant corporation in writing, of other insurance policies obtained by him, he has violated article 3 of the conditions of the policies in question, thereby rendering these policies null and void. Article 3 of the conditions of the policies in question prescribes:ART. 3. Any insurance in force upon all or part of the things insured must be declared in writing by the insured and he should cause the company to insert or mention it in the policy, and without such requisite said policy will be regarded as null and void, and the assured deprived of all rights of indemnity in case of loss.The following clause has been inserted with a typewriter in the policies: "Subject to clauses G and A and other insurances with a special short period attached to this policy." And attached to said policies issued by the defendant there is a sheet of "Other insurances" with the amount and the assurance companies in blank, which, according to the appellee, constitutes a notification that there were other insurances existing at the time.In the case of Benedict vs. Ocean Insurance Co. (31 N.Y., 391-393), the construction of the clause, "privilege for $4,500 additional insurance," was discussed. One of the printed clauses of the policy reads as follows:If said assured, or his assigns, shall hereafter make any other insurance upon the same property, and shall not, with all reasonable diligence, give notice to this corporation, and have the same indorsed on this instrument, or otherwise acknowledged by them, in writing, this policy shall cease and be of no further effect.The Supreme Court of New York held that the words "Privilege for $4,500 additional insurance" made it unnecessary for the assured to inform the insurer of any other policy up to that amount.In the case cited the same goods insured by the defendant company were reinsured to the amount of $4,500 in accordance with the clause "privilege for $4,500 additional insurance;" but in the instant case it may be said that the tobacco insured in the other companies was different from that insured with the defendant, since the number of bales of tobacco in the warehouse greatly exceeded that insured with the defendant and the other companies put together. And according to the doctrine enunciated in 26 Corpus Juris, 188, "to be insurance of the sort prohibited the prior policy must have been insurance upon the same subject matter, and upon the same interest therein.Furthermore, the appellant cannot invoke the violation of article 3 of the conditions of the insurance policies for the first time on appeal, having failed to do so in its answer; besides, as the appellee correctly contends in his brief, Guillermo Cu Unjieng, who was then president and majority shareholder of the appellant company, the Yek Tong Lin Fire & Marine Insurance Co., knew that there were other insurances, at least from the attempt to raise the insurance premium on the warehouse and the appellee's tobacco deposited therein to 1 per centum, and it was later reduced upon petition of the appellant itself and other assurance companies to 0.75 per centum presented to the association of assurance companies in the year 1927, and notwithstanding this, said appellant did not rescind the insurance policies in question, but demanded and collected from the appellee the increased premium.That the defendant had knowledge of the existence of other policies obtained by the plaintiff from other insurance companies, is specifically shown by the defendant's answer wherein it alleges, by way of special defense, the fact that there exist other policies issued by the companies mentioned therein. If, with the knowledge of existence of other insurances which the defendant deemed violations of the contract, it has preferred to continue the policy, its action amounts to a waiver of the annulment of the contract, in accordance with the following doctrine in 19 Cyc., 791, 792:.FAILURE TO ASSERT FORFEITURE IN GENERAL. While the weight of authority is that a policy conditioned to become void upon a breach of a warranty is void ipso facto upon such a breach without formal proceedings on the part of the insurer, yet it is true that such conditions are inserted for the benefit of the insurer and may be waived, and that the insurer may elect to continue the policy despite the breach. If it does the policy is revived and restored. Its failure to assert a forfeiture therefore is at least evidence tending to show a waiver thereof. Many authorities go further, however, and hold that the failure to assert a forfeiture after knowledge of a ground thereof will amount of itself to waiver. . . .The fifth and sixth assignments of error refer to the quantity of tobacco in the Soler warehouse at the time of the fire, which, according to the appellant, did not exceed 4,930 bales. As may be seen, these assignments of error by the appellant involved purely questions of fact, and it is for this court to decide whether the findings of the trial court are supported by the evidence. The judgment appealed from sets forth clearly the evidence presented to the court in order to determine the quantity of tobacco in the warehouse at the time of the fire. We have studied the evidence aforesaid, are fully convinced that the court's findings are well supported by the same. Inasmuch as it has not, in our opinion, been shown that the trial judge overlooked any fact, which, if duly considered would have change the result of the case, we do not feel justified in altering of modifying his findings.Finally, the appellant contends that the trial court erred in arriving at the damages that plaintiff may recover under the policies in question by the cost price of the tobacco damaged by the fire, instead of computing the same on the market price of the said tobacco at the time of the fire; and in declaring that the tobacco damaged was worth more than P300,000. This error is not well taken, for it is clear that the cost price is competent evidence tending to show the value of the article in question. And it was so held the case of Glaser vs. Home Ins. Co. (47 Misc. Rep., 89; 93 N. Y. Supp., 524; Abbott's Proof of Facts, 3d ed., p. 847), where it was declared that the cost of the goods destroyed by fire is some evidence of value, in an action against the insurance company. Exhibits L to L-20, which are invoices for tobacco purchased by the appellee, and the testimony of the public accountant Clemente Uson, who went over them and the rest of the appellee's books after the fire, taken in connection with reports T and Z, adduced as part of his testimony, show that the cost price of each bale of tobacco belonging to the appellee, damaged by the fire, was P51.8544, which, multiplied by 6,264, the number of bales, yields a total of over P320,000.The adjusters of the appellant, White & Page, in ascertaining the market price of the plaintiff's tobacco deposited in the burnt warehouse, taking the information furnished by the Tabacalera and by M. Pujalte, S. en C., as a basis, thus conclude their report: "We therefore are obliged to the conclusion that the value of the tobacco destroyed was not less than P290,000." And, indeed, said adjusters, in behalf of the appellant, appraised the appellee's tobacco assured and damaged by the fire at P303,052.32, collecting from the proceeds of the sale of the tobacco saved from the fire P3,000, the appellants share in proportion to the to the insurance of P100,000 belonging to it, and P190,000 belonging to the other assurance companies, and considered the appellee himself as his own assurer in the amount of P13,052.32 which was the difference between the total value of the tobacco damaged and the total amount of the insurance, P290,000, for which reason the appellee received P129.21, as his proportionate share of the tobacco saved, as shown by Exhibits UU, WW, and XX.Hence the last assignment of error is without merit.Wherefore, the judgment appealed from is in accordance with law, and must be, as it is hereby, affirmed, with costs against the appellant. So ordered.Johnson, Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.

GONZALEZ LAO V. YEK TONG LIN FIRE & MARINE INSURANCE - INSURANCE PREMIUMS55 PHIL 386Facts:> Gonzales was issued 2 fire insurance policies by Yek for 100T covering his leaf tobacco prducts.> They were stored in Gonzales building on Soler St., which on Jan. 11, 1928, burned down.> Art. 3 of the Insurance policies provided that: Any insurance in force upon all or part of the things unsured must be declared in writing by the insured and he (insured) should cause the company to insert or mention it in the policy. Without such requisite, such policy will be regarded as null and void and the insured will be deprived of all rights of indemnity in case of loss.> Notwithstanding said provision, Gonzales entered into other insurance contracts. When he sought to claim from Yek after the fire, the latter denied any liability on the ground of violation of Art. 3 of the said policies.> Gonzales however proved that the insurer knew of the other insurance policies obtained by him long efore the fire, and the insurer did NOT rescind the insurance polices in question but demanded and collected from the insured the premiums.

Issue:Whether or not Yek is still entitled to annul the contract.

Held:NO.The action by the insurance company of taking the premiums of the insured notwithstanding knowledge of violations of the provisions of the policies amounted to waiver of the right to annul the contract of insurance.

MALAYAN INSURANCE CO., INC. (MICO),petitioner, vs.GREGORIA CRUZ ARNALDO, in her capacity as theINSURANCE COMMISSIONER, and CORONACION PINCA,respondents.G.R. No. L-67835 October 12, 1987Facts of the Case:On June 7, 1981, the petitioner (hereinafter called (MICO) issued to the private respondent, P14,000.00 effectiveJuly 22, 1981, until July 22,1982.OnOctober15,1981,MICOallegedlycancelledthe policy fornon-payment,ofthe premiumandsentthecorresponding notice to Pinca.On December 24, 1981, payment of the premiumfor Pinca was received by Domingo Adora,agent of MICO.On January 15, 1982, Adora remitted this payment toMICO,together with other payments.

On January 18, 1982, Pinca's property was completelyburned.On February 5, 1982, Pinca's payment was returned by MICO to Adora on the ground that her policy had beencancelled earlier. But Adora refused to accept it.In due time, Pinca made the requisite demands for payment, which MICO rejected. She then went to the InsuranceCommission. It is because she was ultimately sustained by the public respondent that the petitioner has come to usfor relief.Issue of the Case:Whether or not petitioner liable, for it alleged that the insurance policy was already cancelled due to non-payment ofpremium.Ruling:On the merits, it must also fail. MICO's arguments that there was no payment of premium and that the policy hadbeen cancelled before the occurence of the loss are not acceptable. Its contention that the claim was allowedwithout proof of loss is also untenable.The petitioner relies heavily onSection 77 of the Insurance Code providingthat:SEC. 77. An insurer is entitled to payment of the premium as soon as the thing is exposed to the peril insuredagainst. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurancecompany is valid and binding unless and until the premium thereof has been paid, except in the case of a life or anindustrial life policy whenever the graceperiod provision applies.The above provision is not applicable because payment of the premium was in fact eventually made in this case.Notably, the premium invoice issued to Pinca at the time of the delivery of the policy on June 7, 1981 was stamped"Payment Received" of the amoung of P930.60 on "12-24-81" by Domingo Adora. This is important because itsuggests an understanding between MICO and the insured that such payment could be made later, as agent Adorahad assured Pinca. In any event, it is not denied that this payment was actually made by Pinca to Adora, whoremitted the same to MICO.it is not disputed that the premium was actually paid by Pinca to Adora on December 24, 1981, who received it onbehalf of MICO, to which it was remitted on January 15, 1982. What is questioned is the validity of Pinca's paymentand of Adora's authority to receive it.MICO's acknowledgment of Adora as its agent defeats its contention that he was not authorized to receive thepremium payment on its behalf. It is clearlyprovided in Section 306 of theInsurance Code that:SEC. 306. xxx xxx xxxAny insurancecompany whichdelivers toan insuranceagant orinsurance brokera policyor contract ofinsuranceshall be demmed to have authorized such agent or broker to receive on its behalf payment of any premium which isdue on such policy orcontract of insurance at the time of its issuanceor delivery or which becomes duethereon.On the other hand Article 64 (except "nonpayment of premium") provided the cancellation was made in accordancetherewith and with Article 65.Section 64 reads as follows:SEC. 64. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof tothe insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effectivedate of the policy, of oneor more of the following:(a) non-payment of premium;(b) conviction of a crime arising outof acts increasing the hazard insured against;(c) discovery of fraud or material misrepresentation;(d) discovery of willful, or reckless acts orcommissions increasing the hazard insured against;(e) physical changes in the property insuredwhich result in the property becoming uninsurable;or(f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurerin violation of this Code.As for the method of cancellation, Section 65 provides as follows:SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to thenamed insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on whichthe cancellation is based.A valid cancellation must,therefore, require concurrence ofthe following conditions:(1) There must be prior noticeof cancellation to the insured;(2) The notice must be basedon the occurrence, after the effective date of the policy,of one or more of thegroundsmentioned;(3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in thepolicy;(4) It must state (a) which of thegrounds mentioned in Section 64 isrelied upon and (b)that upon written request ofthe insured, the insurer will furnish thefacts on which the cancellation isbased.

There is no proof that the notice, assuming it complied with the other requisites mentioned above, was actuallymailed to and received by Pinca. All MICO's offers to show that the cancellation was communicated to the insured isits employee's testimony that the said cancellation was sent "by mailthrough our mailing section." without more. Thepetitioner then says that its "stand is enervated (sic) by the legal presumption of regularity and due performance ofduty." (not realizing perhapsthat "enervated" means "debilitated" not "strengthened").On the other hand, there is the flat denial of Pinca, who says she never received the claimed cancellation and who,of course, did not have to prove such denial Considering the strict language of Section 64 that no insurance policyshall be cancelled except upon prior notice, it behooved MICO's to make sure that the cancellation was actually sentto and received by the insured.Adora.incidentally,hadnotbeeninformedofthecancellationeitherandsawnoreasonnottoacceptthesaidpayment.Petition denied. Malayan Insurance Co., Inc. is liable.Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. L-67835 October 12, 1987MALAYAN INSURANCE CO., INC. (MICO),petitioner,vs.GREGORIA CRUZ ARNALDO, in her capacity as the INSURANCE COMMISSIONER, and CORONACION PINCA,respondents.CRUZ,J.:When a person's house is razed, the fire usually burns down the efforts of a lifetime and forecloses hope for the suddenly somber future. The vanished abode becomes a charred and painful memory. Where once stood a home, there is now, in the sighing wisps of smoke, only a gray desolation. The dying embers leave ashes in the heart.For peace of mind and as a hedge against possible loss, many people now secure fire insurance. This is an aleatory contract. By such insurance, the insured in effect wagers that his house will be burned, with the insurer assuring him against the loss, for a fee. If the house does burn, the insured, while losing his house, wins the wagers. The prize is the recompense to be given by the insurer to make good the loss the insured has sustained.It would be a pity then if, having lost his house, the insured were also to lose the payment he expects to recover for such loss. Sometimes it is his fault that he cannot collect, as where there is a defect imputable to him in the insurance contract. Conversely, the reason may be an unjust refusal of the insurer to acknowledge a just obligation, as has happened many times.In the instant case the private respondent has been sustained by the Insurance Commission in her claim for compensation for her burned property. The petitioner is now before us to dispute the decision,1on the ground that there was no valid insurance contract at the time of the loss.The chronology of the relevant antecedent facts is as follows:On June 7, 1981, the petitioner (hereinafter called (MICO) issued to the private respondent, Coronacion Pinca, Fire Insurance Policy No. F-001-17212 on her property for the amount of P14,000.00 effective July 22, 1981, until July 22, 1982.2On October 15,1981, MICO allegedly cancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca.3On December 24, 1981, payment of the premium for Pinca was received by DomingoAdora, agent of MICO.4On January 15, 1982, Adora remitted this payment to MICO,together with other payments.5On January 18, 1982, Pinca's property was completely burned.6On February 5, 1982, Pinca's payment was returned by MICO to Adora on the ground that her policy had been cancelled earlier. But Adora refused to accept it.7In due time, Pinca made the requisite demands for payment, which MICO rejected. She then went to the Insurance Commission. It is because she was ultimately sustained by the public respondent that the petitioner has come to us for relief.From the procedural viewpoint alone, the petition must be rejected. It is stillborn.The records show that notice of the decision of the public respondent dated April 5, 1982, was received by MICO on April 10, 1982.8On April 25, 1982, it filed a motion for reconsideration, which was denied on June 4, 1982.9Notice of this denial was received by MICO on June 13, 1982, as evidenced by Annex "1" duly authenticated by the Insurance Commission.10The instant petition was filed with this Court on July 2, 1982.11The position of the petition is that the petition is governed by Section 416 0f the Insurance Code giving it thirty days wthin which to appeal by certiorari to this Court. Alternatively, it also invokes Rule 45 of the Rules of Court. For their part, the public and private respondents insist that the applicable law is B.P. 129, which they say governs not only courts of justice but also quasi-judicial bodies like the Insurance Commission. The period for appeal under this law is also fifteen days, as under Rule 45.The pivotal date is the date the notice of the denial of the motion for reconsideration was received by MICO.MICO avers this was June 18, 1982, and offers in evidence its Annex "B,"12which is a copy of the Order of June 14, 1982, with a signed rubber-stamped notation on the upper left-hand corner that it was received on June 18, 1982, by its legal department. It does not indicate from whom. At the bottom, significantly, there is another signature under which are the ciphers "6-13-82," for which no explanation has been given.Against this document, the private respodent points in her Annex "1,"13the authenticated copy of the same Order with a rubber-stamped notation at the bottom thereof indicating that it was received for the Malayan Insurance Co., Inc. by J. Gotladera on "6-13-82." The signature may or may not habe been written by the same person who signed at the bottom of the petitioner's Annex "B."Between the two dates, the court chooses to believe June 13, 1982, not only because the numbers "6-13-82" appear on both annexes but also because it is the date authenticated by the administrative division of the Insurance Commission. Annex "B" is at worst self-serving; at best, it might only indicate that it was received on June 18, 1982, by the legal department of MICO, after it had been received earlier by some other of its personnel on June 13, 1982. Whatever the reason for the delay in transmitting it to the legal department need not detain us here.Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission. The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again after June 13, 1981, date of its receipt of notice of the denial of the said motion for reconsideration. As the herein petition was filed on July 2, 1981, or nineteen days later, there is no question that it istardy by four days.Counted from June 13, the fifteen-day period prescribed under Rule 45, assuming it is applicable, would end on June 28, 1982, or alsofour daysfrom July 2, when the petition was filed.If it was filed under B.P. 129, then, considering that the motion for reconsideration was filed on the fifteenth day after MICO received notice of the decision, only one more day would have remained for it to appeal, to wit, June 14, 1982. That would make the petitioneighteen dayslate by July 2.Indeed, even if the applicable law were still R.A. 5434, governing appeals from administrative bodies, the petition would still be tardy. The law provides for a fixed period of ten days from notice of the denial of a seasonable motion for reconsideration within which to appeal from the decision. Accordingly, that ten-day period, counted from June 13, 1982, would have ended on June 23, 1982, making the petition filed on July 2, 1982,nine dayslate.Whichever law is applicable, therefore, the petition can and should be dismissed for late filing.On the merits, it must also fail. MICO's arguments that there was no payment of premium and that the policy had been cancelled before the occurence of the loss are not acceptable. Its contention that the claim was allowed without proof of loss is also untenable.The petitioner relies heavily on Section 77 of the Insurance Code providing that:SEC. 77. An insurer is entitled to payment of the premium as soon as the thing is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.The above provision is not applicable because payment of the premium was in fact eventually made in this case. Notably, the premium invoice issued to Pinca at the time of the delivery of the policy on June 7, 1981 was stamped "Payment Received" of the amoung of P930.60 on "12-24-81" by Domingo Adora.14This is important because it suggests an understanding between MICO and the insured that such payment could be made later, as agent Adora had assured Pinca. In any event, it is not denied that this payment was actually made by Pinca to Adora, who remitted the same to MICO.The payment was made on December 24, 1981, and the fire occured on January 18, 1982. One wonders: suppose the payment had been made and accepted in, say, August 1981, would the commencement date of the policy have been changed to the date of the payment, or would the payment have retroacted to July 22, 1981? If MICO accepted the payment in December 1981 and the insured property had not been burned, would that policy not have expired just the same on July 22, 1982, pursuant to its original terms, and not on December 24, 1982?It would seem from MICO's own theory, that the policy would have become effective only upon payment, if accepted and so would have been valid only from December 24, 1981m but only up to July 22, 1981, according to the original terms. In others words, the policy would have run for only eight months although the premium paid was for one whole year.It is not disputed that the preium was actually paid by Pinca to Adora on December 24, 1981, who received it on behalf of MICO, to which it was remitted on January 15, 1982. What is questioned is the validity of Pinca's payment and of Adora's authority to receive it.MICO's acknowledgment of Adora as its agent defeats its contention that he was not authorized to receive the premium payment on its behalf. It is clearly provided in Section 306 of the Insurance Code that:SEC. 306. xxx xxx xxxAny insurance company which delivers to an insurance agant or insurance broker a policy or contract of insurance shall be demmed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon.And it is a well-known principle under the law of agency that:Payment to an agent having authority to receive or collect payment is equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal.15There is the petitioner's argument, however, that Adora was not authorized to accept the premium payment because six months had elapsed since the issuance by the policy itself. It is argued that this prohibition was binding upon Pinca, who made the payment to Adora at her own riskl as she was bound to first check his authority to receive it.16MICO is taking an inconsistent stand. While contending that acceptance of the premium payment was prohibited by the policy, it at the same time insists that the policy never came into force because the premium had not been paid. One surely, cannot have his cake and eat it too.We do not share MICO's view that there was no existing insurance at the time of the loss sustained by Pinca because her policy never became effective for non-payment of premium. Payment was in fact made, rendering the policy operative as of June 22, 1981, and removing it from the provisions of Article 77, Thereafter, the policy could be cancelled on any of the supervening grounds enumerated in Article 64 (except "nonpayment of premium") provided the cancellation was made in accordance therewith and with Article 65.Section 64 reads as follows:SEC. 64. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:(a) non-payment of premium;(b) conviction of a crime arising out of acts increasing the hazard insured against;(c) discovery of fraud or material misrepresentation;(d) discovery of willful, or reckless acts or commissions increasing the hazard insured against;(e) physical changes in the property insured which result in the property becoming uninsurable;or(f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code.As for the method of cancellation, Section 65 provides as follows:SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based.A valid cancellation must, therefore, require concurrence of the following conditions:(1) There must be prior notice of cancellation to the insured;17(2) The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds mentioned;18(3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy;19(4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will furnish the facts on which the cancellation is based.20MICO's claims it cancelled the policy in question on October 15, 1981, for non-payment of premium. To support this assertion, it presented one of its employees, who testified that "the original of the endorsement and credit memo" presumably meaning the alleged cancellation "were sent the assured by mail through our mailing section"21However, there is no proof that the notice, assuming it complied with the other requisites mentioned above, was actually mailed to and received by Pinca. All MICO's offers to show that the cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our mailing section." without more. The petitioner then says that its "stand is enervated (sic) by the legal presumption of regularity and due performance of duty."22(not realizing perhaps that "enervated" means "debilitated" not "strengthened").On the other hand, there is the flat denial of Pinca, who says she never received the claimed cancellation and who, of course, did not have to prove such denial Considering the strict language of Section 64 that no insurance policy shall be cancelled except upon prior notice, it behooved MICO's to make sure that the cancellation was actually sent to and received by the insured. The presumption cited is unavailing against the positive duty enjoined by Section 64 upon MICO and the flat denial made by the private respondent that she had received notice of the claimed cancellation.It stands to reason that if Pinca had really received the said notice, she would not have made payment on the original policy on December 24, 1981. Instead, she would have asked for a new insurance, effective on that date and until one year later, and so taken advantage of the extended period. The Court finds that if she did pay on that date, it was because she honestly believed that the policy issued on June 7, 1981, was still in effect and she was willing to make her payment retroact to July 22, 1981, its stipulated commencement date. After all, agent Adora was very accomodating and had earlier told her "to call him up any time" she was ready with her payment on the policy earlier issued. She was obviously only reciprocating in kind when she paid her premium for the period beginning July 22, 1981, and not December 24, 1981.MICO's suggests that Pinca knew the policy had already been cancelled and that when she paid the premium on December 24, 1981, her purpose was "to renew it." As this could not be done by the agent alone under the terms of the original policy, the renewal thereof did not legally bind MICO. which had not ratified it. To support this argument, MICO's cites the following exchange:Q: Now, Madam Witness, on December 25th you made the alleged payment. Now, my question is that, did it not come to your mind that after the lapse of six (6) months, your policy was cancelled?A: I have thought of that but the agent told me to call him up at anytime.Q: So if you thought that your policy was already intended to revive cancelled policy?A: Misleading, Your Honor.Hearing Officer: The testimony of witness is that, she thought of that.Q: I will revise the question. Now, Mrs. Witness, you stated that you thought the policy was cancelled. Now, when you made the payment of December 24, 1981, your intention was to revive the policy if it was already cancelled?A: Yes, to renew it.23A close study of the above transcript will show that Pinca meant to renew the policyifit had really been already cancelled but not if it was stffl effective. It was all conditional. As it has not been shown that there was a valid cancellation of the policy, there was consequently no need to renew it but to pay the premium thereon. Payment was thus legally made on theoriginaltransaction and it could be, and was, validly received o