Philippine Phoenix Surety & Insurance, Inc. v. Woodworks, Inc. (1967)

Facts: Phoenix and Woodworks are both corporations duly organized and existing under the laws of the Philippines. Woodworks obtained from Phoenix and was issued a fire insurance policy for the amount of P300k. The premiums amounted to P6,051.95 but Woodworks only paid P3,000. Despite several demands made by Phoenix, Woodworks failed to pay. Thus, Phoenix filed a case to recover from Woodworks the unpaid balance of the premiums (P3,522.09). CFI Manila decided in favor of Phoenix. Woodworks appealed, claiming that its non-payment of the premium cancelled the policy and thus is not liable to pay for the premiums due.

Issue: WON the non-payment of the premium by Woodworks cancelled the contract of insurance

Ratio//Held: No, non-payment of premium due did not cancel the contract of insurance. As the contract of insurance had already become perfected, the parties could demand from each other the performance of whatever obligations they had assumed. In the case of the insurer (Phoenix), it is obvious that it had the right to demand from the insured (Woodworks) the completion of the payment of the premium due OR sue for the rescission of the contract. Since Phoenix chose to demand specific performance of Woodworks obligation to pay the balance of the premium, the latter's duty to pay is indeed indubitable. If the non-payment of the premium would cancel the policy, it would place exclusively in the hands of one of the contracting parties the right to decide whether the contract should stand or not.

Disposition: Wherefore, the appealed decision being in accordance with law and the evidence, the same is hereby affirmed, with costs.