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    American Homes v. Chua

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    Angela Louise Sabaoan
    The Supreme Court ruled in favor of Antonio Chua, finding that a valid insurance contract existed at the time of the fire. While Chua paid the renewal premium with a check the day before the fire, the check was later honored, and American Home Assurance issued an official receipt and renewal certificate acknowledging payment. Under the Insurance Code, an insurer is authorized to receive premium payments through its agents, and an acknowledgment of premium payment in a policy is conclusive evidence of its validity. Therefore, American Home Assurance could not deny the claim based on the timing of the check cashing.

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    © All Rights Reserved
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    American Homes v. Chua

    Uploaded by

    Angela Louise Sabaoan
    58 views2 pages
    The Supreme Court ruled in favor of Antonio Chua, finding that a valid insurance contract existed at the time of the fire. While Chua paid the renewal premium with a check the day before the fire, the check was later honored, and American Home Assurance issued an official receipt and renewal certificate acknowledging payment. Under the Insurance Code, an insurer is authorized to receive premium payments through its agents, and an acknowledgment of premium payment in a policy is conclusive evidence of its validity. Therefore, American Home Assurance could not deny the claim based on the timing of the check cashing.

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    insurance

    Original Title

    133. American Homes v. Chua

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    The Supreme Court ruled in favor of Antonio Chua, finding that a valid insurance contract existed at the time of the fire. While Chua paid the renewal premium with a check the day before the fire, the check was later honored, and American Home Assurance issued an official receipt and renewal certificate acknowledging payment. Under the Insurance Code, an insurer is authorized to receive premium payments through its agents, and an acknowledgment of premium payment in a policy is conclusive evidence of its validity. Therefore, American Home Assurance could not deny the claim based on the timing of the check cashing.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    58 views2 pages

    American Homes v. Chua

    Uploaded by

    Angela Louise Sabaoan
    The Supreme Court ruled in favor of Antonio Chua, finding that a valid insurance contract existed at the time of the fire. While Chua paid the renewal premium with a check the day before the fire, the check was later honored, and American Home Assurance issued an official receipt and renewal certificate acknowledging payment. Under the Insurance Code, an insurer is authorized to receive premium payments through its agents, and an acknowledgment of premium payment in a policy is conclusive evidence of its validity. Therefore, American Home Assurance could not deny the claim based on the timing of the check cashing.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    Waiver of Right to Rescind

    AMERICAN HOME ASSURANCE COMPANY v. ANTONIO CHUA

    G.R. No. 130421. June 28, 1999

    FACTS:

    April 5, 1990, Antonio Chua renewed the fire insurance for its stock-in-trade of
    his business, Moonlight Enterprises with American Home Assurance Companyby
    issuing a check of P2,983.50 to its agent James Uy who delivered the Renewal
    Certificate to him. April 6, 1990, Moonlight Enterprises was completely razed by fire with
    an est. loss of P4,000,000 to P5,000,000. April 10, 1990: An official receipt was issued
    and subsequently, a policy was issued covering March 25 1990 to March 25 1991.
    Antonio Chua filed an insurance claim with American Home and 4 other co-insurers
    (Pioneer Insurance and Surety Corporation, Prudential Guarantee and Assurance, Inc.
    and Filipino Merchants Insurance Co).

    In its defense, petitioner claimed there was no existing insurance contract when
    the fire occurred since respondent did not pay the premium. It also alleged that even
    assuming there was a contract, respondent violated several conditions of the policy,
    particularly: (1) his submission of fraudulent income tax return and financial statements;
    (2) his failure to establish the actual loss, which petitioner assessed at P70,000; and (3)
    his failure to notify to petitioner of any insurance already effected to cover the insured
    goods. These violations, petitioner insisted, justified the denial of the claim.

    To bolster his argument, respondent cites Section 66 of the Insurance Code,


    which requires the insurer to give a notice to the insured of its intention to terminate the
    policy forty-five days before the policy period ends. In the instant case, petitioner opted
    not to terminate the policy. Instead, it renewed the policy by sending its agent to
    respondent, who was issued a renewal certificate upon delivery of his check payment
    for the renewal of premium. At this precise moment the contract of insurance was
    executed and already in effect. Respondent also claims that it is standard operating
    procedure in the provinces to pay insurance premiums by check when collected by
    insurance agents.

    The trial court ruled in favor of respondent. It found that respondent paid by way
    of check a day before the fire occurred. The check, which was deposited in petitioners
    bank account, was even acknowledged in the renewal certificate issued by petitioners
    agent. On appeal, the assailed decision was affirmed in toto by the Court of Appeals.

    ISSUE:

    Is there a valid payment of premium considering that the check was cashed after
    the occurrence of the fire since the renewal certificate issued containing the
    acknowledgement receipt?

    RULING:

    Yes. Under Section 77 of the Insurance Code, 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 life or an industrial life policy
    whenever the grace period provision applies.

    Section 66 of the Insurance Code is not applicable since it is not a termination but
    renewal. According to the trial court the renewal certificate issued to respondent
    contained the acknowledgment that premium had been paid. It is not disputed that the
    check drawn by respondent in favor of petitioner and delivered to its agent was honored
    when presented and petitioner forthwith issued its official receipt to respondent on 10
    April 1990. Section 306 of the Insurance Code provides that any insurance company
    which delivers a policy or contract of insurance to an insurance agent or insurance
    broker shall be deemed to have authorized such agent or broker to receive on its behalf
    payment of any premium which is due on such policy or contract of insurance at the
    time of its issuance or delivery or which becomes due thereon. In the instant case, the
    best evidence of such authority is the fact that petitioner accepted the check and issued
    the official receipt for the payment. It is, as well, bound by its agent’s acknowledgment
    of receipt of payment. Section 78 of the Insurance Code explicitly provides that an
    acknowledgment in a policy or contract of insurance of the receipt of premium is
    conclusive evidence of its payment, so far as to make the policy binding,
    notwithstanding any stipulation therein that it shall not be binding until the premium is
    actually paid.

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