Lessons Applicable:
- Authority to Receive Payment/Effect of Payment (Insurance)
- Binding Effect of Payment (Insurance)
Laws Applicable: Section 77,Section 301, Section 306 of the Insurance Code
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
- January 24 1984: Valenzuela gave the check in payment of the premium on the insurance policy to Mr. Victorio Chua
- January 25 1984: M/V Seven Ambassador sank
- 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
- CA: Absolved Seven Brothers
- stipulation in the charter party that the ship owner would be exempted from liability in case of loss
- South Sea contends that it is cancelled and that Mr. Chua is not authorized
ISSUE: W/N Mr. Chua is an authorized representative to receive the payment
HELD: YES. petition is DENIED
- 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