SOUTH SEA SURETY AND INSURANCE COMPANY, INC., petitioner, vs.
ISSUE: Whether defendants shipping corporation is liable to the plaintiff for
HON. COURT OF APPEALS and VALENZUELA HARDWOOD AND
INDUSTRIAL SUPPLY, INC., respondents.
June 2, 1995 | Vitug, J.
Insurance Code Section 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.
FACTS:
On Jan 16, 1984, Valenzuela Hardwood and Industrial Supply entered
into an agreement with Seven Brothers, where the latter would load
on board its vessel M/V Ambassador the formers round logs (940) at
Isabela to ship to Manila
Valenzuela Hardwood insured logs against loss and/or damage with
South Sea Surety and Insurance Co. for Php 2,000,000 and the latter
issued policy (Date of issuance: Jan 20, 1984)
Valenzuela gave check in payment of premium on the insurance policy
to Mr. Victorio Chua. (January 24, 1984)
Vessel sank on January 25, resulting to loss of logs.
A check for P5,625.00 to cover premium was tendered to insurer but
it was not accepted. Petitioner cancelled the policy for non-payment in
accordance with Section 77 of the Insurance Code. (January 30, 1984)
Valenzuela demanded payment of policy.
TC: ruled in favor of Valenzuela Hardwood.
CA: afrmed judgement only against insurance corporation, absolving
the shipping entity from liability (there was stipulation in the charter
that ship owner exempt from liability)
In this petition, petitioner argues that it should have been freed from
liability to Hardwood. CA disregarded Sec 66 and for holding Victorio
Chua to have been an authorized representative of the insurer.
the latter's lost logs.
RULING: NO.
Under American jurisprudence, a common carrier undertaking to carry
a special or chartered to a special person only, becomes a private
carrier.
As a private carrier, a stipulation exempting the owner from liability
even for the negligence of its agent is valid (Home Insurance
Company, Inc. vs. American Steamship Agencies, Inc., 23 SCRA 24).
The shipping corporation should not therefore be held liable for the
loss of the logs.
Undoubtedly the payment of the premium is a condition precedent to,
and essential for, the efcaciousness of the contract.
The 2 statutorily provided exceptions are: (1) 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
acknowledgement of the receipt of premium, this acknowledgement
being declared by law to be then conclusive evidence of the premium
payment.
As to the liability of Victorio Chua, the Court agreed with the CA that
he is an administrative assistant of Columbia Insurance Brokers for 10
years. When South Sea delivered to Mr. Chua the policy for the
plaintiffs, he was deemed authorized to receive premium which is due
on its behalf.
No reason to discard conclusions of appellate court. PETITION
DENIED