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CPB General Insurance Co., Inc.-vs-Masagana Telemart, inc.G.R. No. 137172, 04 April 2001 Facts

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1. CPB General Insurance Co. obtained five insurance policies from Masagana Telemart covering its properties from May 22, 1991 to May 22, 1992. However, the properties were destroyed by fire on June 13, 1992. 2. On July 13, 1992, Masagana tendered renewal premium payments for the policies, which CPB accepted. However, CPB later rejected Masagana's claim for indemnification, arguing the policies had expired. 3. The issue is whether Section 77 of the Insurance Code, requiring strict prepayment of premiums, must be applied in CPB's favor, despite its practice of granting credit terms for premium payments. The court held that an understanding between the

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CPB General Insurance Co., Inc.-vs-Masagana Telemart, inc.G.R. No. 137172, 04 April 2001 Facts

Uploaded by

CresteynTeyng
26 views1 page
1. CPB General Insurance Co. obtained five insurance policies from Masagana Telemart covering its properties from May 22, 1991 to May 22, 1992. However, the properties were destroyed by fire on June 13, 1992. 2. On July 13, 1992, Masagana tendered renewal premium payments for the policies, which CPB accepted. However, CPB later rejected Masagana's claim for indemnification, arguing the policies had expired. 3. The issue is whether Section 77 of the Insurance Code, requiring strict prepayment of premiums, must be applied in CPB's favor, despite its practice of granting credit terms for premium payments. The court held that an understanding between the

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1. CPB General Insurance Co. obtained five insurance policies from Masagana Telemart covering its properties from May 22, 1991 to May 22, 1992. However, the properties were destroyed by fire on June 13, 1992. 2. On July 13, 1992, Masagana tendered renewal premium payments for the policies, which CPB accepted. However, CPB later rejected Masagana's claim for indemnification, arguing the policies had expired. 3. The issue is whether Section 77 of the Insurance Code, requiring strict prepayment of premiums, must be applied in CPB's favor, despite its practice of granting credit terms for premium payments. The court held that an understanding between the

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© All Rights Reserved
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
26 views1 page

CPB General Insurance Co., Inc.-vs-Masagana Telemart, inc.G.R. No. 137172, 04 April 2001 Facts

Uploaded by

CresteynTeyng
1. CPB General Insurance Co. obtained five insurance policies from Masagana Telemart covering its properties from May 22, 1991 to May 22, 1992. However, the properties were destroyed by fire on June 13, 1992. 2. On July 13, 1992, Masagana tendered renewal premium payments for the policies, which CPB accepted. However, CPB later rejected Masagana's claim for indemnification, arguing the policies had expired. 3. The issue is whether Section 77 of the Insurance Code, requiring strict prepayment of premiums, must be applied in CPB's favor, despite its practice of granting credit terms for premium payments. The court held that an understanding between the

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CPB General Insurance Co., Inc.-vs-Masagana Telemart, inc.G.R. No.

137172, 04 April 2001


FACTS
Plaintiff [herein Respondent] obtained from defendant [herein
Petitioner] five (5)insurance policies on its properties. All five (5) policies
reflect on their face the effectivity term: "from 4:00 P.M. of 22 May 1991 to
4:00 P.M. of 22 May 1992." On June 13,
1992,p l a i n t i f f s p r o p e r t i e s w e r e r a z e d b y f i r e . O n J u l y 1 3 ,
1 9 9 2 , p l a i n t i f f t e n d e r e d , a n d defendant accepted, five (5) E
q u i t a b l e B a n k M a n a g e r ' s C h e c k s a s r e n e w a l p r e m i u m payments
for which Official Receipt Direct Premium was issued by defendant.
Masaganamade its formal demand for indemnification for the burned
insured properties. On thesame day, defendant returned the five (5)
manager's checks stating in its letter) that it was rejecting Masagana's
claim on the following grounds:"a) Said policies expired last May 22, 1992
and were not renewed for another term;b ) D e f e n d a n t h a d
put plaintiff and its alleged broker on notice of nonr e n e w a l earlier; andc) The properties covered by the said policies were
burned in a fire that took placelast June 13, 1992, or before tender of
premium payment."
ISSUE
Whether Section 77 of the Insurance Code of 1978 (P.D. No. 1460) must be
strictlyapplied to Petitioner's advantage despite its practice of
granting a 60- to 90-day creditterm for the payment of premiums.
HELD
Section 77 of the Insurance Code of 1978 provides:SECTION 77. An insurer
is entitled to payment of the premium as soon as the thinginsured
is exposed to the peril insured against. Notwithstanding
any agreement tothe contrary, no policy or contract of insurance
issued by an insurance company isvalid and binding unless and until the
premium thereof has been paid, except in thecase of a life or an industrial
life policy whenever the grace period provision applies.While the import of
Section 77 is that prepayment of premiums is strictly required as a
condition to the validity of the contract, We are not prepared to rule that the
requestt o m a k e i n s t a l l m e n t p a y m e n t s d u l y a p p r o v e d b y t h e
i n s u r e r w o u l d p r e v e n t t h e e n t i r e contract of insurance from going into
effect despite payment and acceptance of the initialpremium or first
installment. So is an understanding to allow insured to pay premiums
ini n s t a l l m e n t s n o t
so prescribed. At the very least, both parties should be deem
e d i n estoppel to question the arrangement they have voluntarily accepted

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