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    105 Philippine Phoenix V Woodworks (1979)

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    Jovelan V. Escaño
    Phoenix sued Woodworks to collect the unpaid balance of the insurance premium after cancelling the policy for non-payment. The Supreme Court ruled in favor of Woodworks, finding that without payment of the premium, no valid contract existed. The policy required pre-payment of the premium as a condition precedent to coverage. As Woodworks made no partial payment, the policy lapsed when premiums went unpaid, extinguishing any obligations between the parties. Phoenix could not recover unearned premium for the period the policy was not in effect due to lapse for lack of consideration.

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    © All Rights Reserved
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    105 Philippine Phoenix V Woodworks (1979)

    Uploaded by

    Jovelan V. Escaño
    47 views1 page
    Phoenix sued Woodworks to collect the unpaid balance of the insurance premium after cancelling the policy for non-payment. The Supreme Court ruled in favor of Woodworks, finding that without payment of the premium, no valid contract existed. The policy required pre-payment of the premium as a condition precedent to coverage. As Woodworks made no partial payment, the policy lapsed when premiums went unpaid, extinguishing any obligations between the parties. Phoenix could not recover unearned premium for the period the policy was not in effect due to lapse for lack of consideration.

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    105 Philippine Phoenix v Woodworks (1979)

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    Phoenix sued Woodworks to collect the unpaid balance of the insurance premium after cancelling the policy for non-payment. The Supreme Court ruled in favor of Woodworks, finding that without payment of the premium, no valid contract existed. The policy required pre-payment of the premium as a condition precedent to coverage. As Woodworks made no partial payment, the policy lapsed when premiums went unpaid, extinguishing any obligations between the parties. Phoenix could not recover unearned premium for the period the policy was not in effect due to lapse for lack of consideration.

    Copyright:

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

    105 Philippine Phoenix V Woodworks (1979)

    Uploaded by

    Jovelan V. Escaño
    Phoenix sued Woodworks to collect the unpaid balance of the insurance premium after cancelling the policy for non-payment. The Supreme Court ruled in favor of Woodworks, finding that without payment of the premium, no valid contract existed. The policy required pre-payment of the premium as a condition precedent to coverage. As Woodworks made no partial payment, the policy lapsed when premiums went unpaid, extinguishing any obligations between the parties. Phoenix could not recover unearned premium for the period the policy was not in effect due to lapse for lack of consideration.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Philippine Phoenix Surety & Insurance Co. v. Woodworks, Inc.

    G.R. No. L-25317 | 6 August 1979

    TOPIC: Premium

    FACTS:
     Defendant Woodworks applied for fire insurance from Plaintiff Phoenix. The Policy was for P500,000 over
    Woodworks’ building, equipment, etc. for one year (July 21, 1960-61). The premium, plus other charges, amounted to
    P10,593.36.
     Woodworks did not pay the premium.
     On April 19, 1961, Phoenix notified Woodworks of the cancellation of the Policy, allegedly upon Woodworks’ request.
     Phoenix credited P3,110.25 to Woodworks for the unexpired period of 94 days; then claimed the balance of P7,483.11
    as “earned premium from July 21, 1960 to April 18, 1961, or 271 days”. It demanded from Woodworks, who
    countered that Phoenix was not liable for any indemnity during the period the premiums were not paid.
     Phoenix sued Woodworks for the balance as “earned premium”. Woodworks again argued that its own failure to pay
    the premium after the policy was issued put an end to the contract and rendered it unenforceable.
     Woodworks appealed to the CA, who certified the case to the SC on a question of law.

    ISSUE: WON Phoenix may claim from Woodworks.

    HOLDING and RATIO:


    No, it may not. Appeal granted.
     In a contract of insurance, the element of consideration is the premium paid. Without it, there is no contract.
     The Policy between Phoenix and Woodworks included such provisions:
    o Coverage if the property, or any part thereof, indicated in the policy is damaged by fire or lightning after
    payment of Premium, at any time between 4 pm of July 21, 1960 and 4 pm of July 21, 1961;
    o No payment in respect of any premium shall be deemed payment to Phoenix unless a printed receipt for the
    same, signed by an official or agent of the company, shall have been given to Woodworks;
    o Woodworks may request to terminate the insurance, and Phoenix will retain the short period rate for the
    time the policy has been in force;
    o Phoenix may also terminate the insurance, upon notifying Woodworks, in which case Phoenix will be liable to
    repay on demand a ratable proportion of the premium for the unexpired term.
     The Policy provides for pre-payment of premium. Accordingly, “when the policy is tendered the insured must pay the
    premium unless credit is given or there is a waiver or some agreement obviating the necessity for payment.”
     There was no agreement for a credit extension given to Woodworks.
     This case is different from the other case with the same parties because in that case recovery of the balance of the
    unpaid premium was allowed. This is because in said case, there was a perfected, partially performed contract of
    insurance as far as payment of the premium was concerned.
     Here, no partial payment of premiums has been made. Therefore, the policy is deemed to have lapsed.
     “The non-payment of premiums does not merely suspend but puts an end to an insurance contract, since the time of
    the payment is peculiarly of the essence of the contract.”
     If a fire did destroy the goods, Phoenix would have had a valid defense against recovery under the Policy it issued.
     Compliance by Woodworks with the terms of the contract is a condition precedent to the right of recovery.
     The burden is on an insured to keep a policy in force by the payment of premiums, rather than on the insurer to exert
    every effort to prevent the insured from allowing a policy to elapse through a failure to make premium payments.
     The continuance of the insurer’s obligation is conditional upon the payment of premiums, so that no recovery can be
    had upon a lapsed policy, the contractual relation between the parties having ceased.

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