26_makati Tuscany Condominium Corp. V. Ca_nathandeleon.docx

26. Makati Tuscany Condominium Corp. v. CA G.R. No. 95546 (6 Nov 1992) 215 SCRA 462 Facts: In 1982, MTCC applied for and was granted an insurance policy by American Home Assurance Co. (AHAC) covering its condo, with the premium set at P466K, which MTCC paid in 4 installments. The policy was renewed for 1983 and 1984, but MTCC only paid 2 out of 4 installments in 1984 and refused to pay the balance, so AHAC files to collect. In its answer with counterclaim, MTCC admits the issuance of the policy, but avers that it was never valid and binding because it was paid in installments contrary to Sec. 77 of the Ins. Code, and sought reimbursement of all the premiums it had paid since 1982. On summary judgment, the RTC dismissed both the complaint and counterclaim on marginal issues; on appeal, the CA favored AHAC and ordered MTCC to pay the balance, because while Ins. Code Sec. 77 states that an insurance contract cannot be made valid and binding without payment of premium, there was no prohibition against agreeing to pay on installment basis because that would enable the insurer to deny liability if the premium is not yet fully paid—the policy here therefore became binding upon payment of the first installment. MTCC now contests before the SC that there was no perfected contract of insurance because payment via installment invalidated the policy since 1982, despite AHAC’s acceptance of payment, for which MTCC now demands a refund. Issue: Is the insurance contract paid on installment basis valid? Held: Yes, it is valid. CA affirmed. Ratio: ● The fact that the policy was repeatedly renewed under the same installment arrangement shows that both parties had a meeting of the minds ○ Because AHAC accepted the previous installments without question, it shows its intent to honor the policy and assume the risk ○ At the very least, both parties are estopped from questioning the arrangement they voluntarily and mutually accepted ○ Because of their intent to make the policy valid, as shown by their respective actions, MTCC is bound by its obligation to pay the entirety of the premium and is not entitled to refund ● Sec. 77 merely precludes parties from agreeing that the insurance contract is valid without payment of premium, but does not expressly prohibit installment payments ○ Sec. 78 allows the insurer to waive the condition of prepayment of the whole sum of the premium by making an acknowledgement in the policy about receipt of premium as conclusive evidence of payment