GAISANO v. DISC

Jaime T. Gaisano Vs. Development Insurance and Surety Corporation

G.R. No. 190702

February 27, 2017

Facts:

Petitioner was the registered owner of a 1992 Mitsubishi Montero with plate number GTJ-777 (vehicle), while respondent is a domestic corporation engaged in the insurance business. On September 27, 1996, respondent issued a comprehensive commercial vehicle policy to petitioner in the amount of Pl,500,000.00 over the vehicle for a period of one year commencing on September 27, 1996 up to September 27, 1997. Respondent also issued two other commercial vehicle policies to petitioner covering two other motor vehicles for the same period. To collect the premiums and other charges on the policies, respondent's agent, Trans-Pacific Underwriters Agency (Trans-Pacific), issued a statement of account to petitioner's company, Noah's Ark

Merchandising (Noah's Ark). Noah's Ark immediately processed the payments and issued a Far East Bank check dated September 27, 1996 payable to Trans-Pacific on the same day. The check bearing the amount of Pl40,893.50 represents payment for the three insurance policies, with P55,620.60 for the premium and other charges over the vehicle. However, nobody from Trans-Pacific picked up the check that day (September 27) because its president and general manager, Rolando Herradura, was celebrating his birthday. Trans-Pacific informed Noah's Ark that its messenger would get the check the next day, September 28. In the evening of September 27, 1996, while under the official custody of Noah's Ark marketing manager Achilles Pacquing (Pacquing) as a service company vehicle, the vehicle was stolen in the vicinity of SM Megamall at Ortigas, Mandaluyong City. Pacquing reported the loss to the Philippine National Police Traffic Management Command at Camp Crame in Quezon City. Despite search and retrieval efforts, the vehicle was not recovered. Oblivious of the incident, Trans-Pacific picked up the check the next day, September 28. It issued an official receipt numbered 124713 dated September 28, 1996, acknowledging the receipt of P55,620.60 for the premium and other charges over the vehicle. The check issued to Trans Pacific for Pl40,893.50 was deposited with Metrobank for encashment on October 1, 1996.

Issue:

Whether there is a binding insurance contract between petitioner and respondent.

Ruling:

The court deny the petition. Insurance is a contract whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. Just like any other contract, it requires a cause or consideration. The consideration is the premium, which must be paid at the time and in the way and manner specified in the policy. If not so paid, the policy will lapse and be forfeited by its own terms. The law, however, limits the parties' autonomy as to when payment of premium may be made for the contract to take effect. The general rule in insurance laws is that unless the premium is paid, the insurance policy is not valid and binding.

Section 77 of the Insurance Code, applicable at the time of the issuance of the policy, provides: Sec. 77. An insurer is entitled to payment of the premium as soon as the thing insured 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.