MALAYAN INSURANCE CO., INC. (MICO), PETITIONER, VS. GREGORIA CRUZ ARNALDO, IN HER CAPACITY AS THE INSURANCE COMMISSIONER, AND CORONACION PINCA, RESPONDENTS.

When a person’s house is razed, the fire usually burns down the
efforts of a lifetime and forecloses hope for the suddenly somber future.  The vanished abode becomes a charred and
painful memory.  Where once stood a home,
there is now, in the sighing wisps of smoke, only a gray desolation.  The dying embers leave ashes in the heart.

For peace of mind and as a hedge against possible loss, many
people now secure fire insurance.  This
is an aleatory contract.  By such insurance, the insured in effect
wagers that his house will be burned, with the insurer assuring him against the
loss, for a fee.  If the house does burn,
the insured, while losing his house, wins the wager.  The prize is the recompense to be given by
the insurer to make good the loss the insured has sustained.

It would be a pity then if, having lost his house, the insured
were also to lose the payment he expects to recover for such loss.  Sometimes it is his fault that he cannot
collect, as where there is a defect imputable to him in the insurance
contract.  Conversely, the reason may be
an unjust refusal of the insurer to acknowledge a just obligation, as has happened many times.

In the instant case, the private respondent has been sustained by
the Insurance Commission in her claim for compensation for her burned
property.  The petitioner is now before
us to dispute the decision,^[1] on the ground that there was no valid
insurance contract at the time of the loss.

The chronology of the relevant antecedent facts is as follows:

On June 7, 1981,
the petitioner (hereinafter called MICO) issued to the private respondent, Coronacion Pinca, Fire Insurance
Policy No. F-001-17212 on her property for the amount of P100,000.00,
effective July 22, 1981,
until July 22, 1982.^[2]

On October 15, 1981,
MICO allegedly canceled the policy for non-payment of the premium and sent the
corresponding notice to Pinca.^[3]

On December 24, 1981,
payment of the premium from Pinca was received by
Domingo Adora, agent of MICO.^[4]

On January 15, 1982,
Adora remitted this payment to MICO, together with
other payments.^[5]

On January 18, 1982,
Pinca’s property was completely burned.^[6]

On February 5, 1982,
Pinca’s payment was returned by MICO to Adora on the ground that her policy had been canceled
earlier.  But Adora
refused to accept it.^[7]

In due time, Pinca
made the requisite demands for payment, which MICO rejected.  She then went to the Insurance
Commission.  It is because she was
ultimately sustained by the public respondent that the petitioner has come to
us for relief.

From the procedural viewpoint alone, the petition must be
rejected.  It is stillborn.

The records show that notice of the decision of the public
respondent dated April 5, 1982,
was received by MICO on April 10, 1982.^[8]
On April 25, 1982, it filed
a motion for reconsideration, which was denied on June 4, 1982.^[9]
Notice of this denial was received by MICO on June 13, 1982, as evidenced by Annex “1,” duly
authenticated by the Insurance
Commission.^[10] The instant petition was filed with this
Court on July 2, 1982.^[11]

The position of the petitioner is that the petition is governed
by Section 416 of the Insurance Code giving it thirty days within which to
appeal by certiorari to this Court.  Alternatively, it also invokes Rule 45 of the
Rules of Court.  For their part, the public and private
respondents insist that the applicable law is B.P. 129, which they say governs
not only courts of justice but also quasi-judicial bodies like the Insurance
Commission.  The period for appeal under
this law is also fifteen days, as under Rule 45.

The pivotal date is the date the notice of the denial of the
motion for reconsideration was received by MICO.

MICO avers this was June
18, 1982, and offers in evidence its Annex “B,”^[12]
which is a copy of the Order of June
14, 1982, with a signed rubber-stamped notation on the upper
left-hand corner that it was received on June 18, 1982, by its legal department.  It does not indicate from whom.  At the bottom, significantly, there is
another signature under which are the ciphers “6-13-82,” for which no
explanation has been given.

Against this document, the private respondent points in her Annex
“1,”^[13]
the authenticated copy of the same Order with a rubber-stamped notation at the
bottom thereof indicating that it was received for the
Malayan Insurance Co., Inc. by J. Gotladera on “6-13-82.” The signature may or
may not have been written by the same person who signed at the bottom of the
petitioner’s Annex “B.”

Between the two dates, the court chooses to believe June 13, 1982, not only because the
numbers “6-13-82”
appear on both annexes but also because it is the date authenticated by the
administrative division of the Insurance Commission.  Annex “B” is at worst self-serving;
at best, it might only indicate that it was received on June 18, 1982, by the legal department of MICO,
after it had been received earlier by some other of its personnel on June 13, 1982.  Whatever the reason for the delay in transmitting
it to the legal department need not detain us here.

Under Section 416 of the Insurance Code, the period for appeal is
thirty days from notice of the decision of the Insurance Commission.  The petitioner filed its motion for
reconsideration on April 25, 1981,
or fifteen days from such notice, and the reglementary
period began to run again after June
13, 1981, date of its receipt of notice of the denial of the said
motion for reconsideration.  As the
herein petition was filed on July 2,
1981, or nineteen days later, there is no question that it is tardy by four days.

Counted from June 13, the fifteen-day period prescribed under
Rule 45, assuming it is applicable, would end on June 28, 1982, or also four days from
July 2, when the petition was filed.

If it was filed under B.P. 129, then, considering that the motion
for reconsideration was filed on the fifteenth day after MICO received notice
of the decision, only one more day would have remained for it to appeal, to
wit, June 14, 1982.  That would make the petition eighteen days
late by July 2.

Indeed, even if the applicable law were
still R.A. 5434, governing appeals from administrative bodies, the
petition would still be tardy. 
The law provides for a fixed period of ten days from notice of the
denial of a seasonable motion for reconsideration within which to appeal from
the decision.  Accordingly, that ten-day
period, counted from June 13, 1982,
would have ended on June 23, 1982,
making the petition filed on July 2,
1982 nine days late.

Whichever law is applicable, therefore, the petition can and
should be dismissed for late filing.

On the merits, it must also fail. 
MICO’s arguments that there was no payment of premium and that the
policy had been canceled before the occurrence of the loss are not
acceptable.  Its contention that the
claim was allowed without proof of loss is also untenable.

The petitioner relies heavily on Section 77 of the Insurance Code
providing that:

“SEC. 77.  An insurer is entitled to payment of the
premium as soon as the thing 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.”

The above provision is not applicable because payment of the
premium was in fact eventually made in this case.  Notably, the premium invoice issued to Pinca at the time of the delivery of the policy on June 7, 1981 was stamped “Payment
Received” of the amount of P930.60 on “12-24-81” by Domingo Adora.^[14]
This is important because it suggests an understanding between MICO and the
insured that such payment could be made later, as agent Adora had assured Pinca.  In any event,
it is not denied that this payment was actually made by Pinca
to Adora, who remitted the same to MICO.

The payment was made on December
24, 1981, and the fire occurred on January 18, 1982. 
One wonders:  suppose the payment
had been made and accepted in, say, August 1981, would the commencement date of
the policy have been changed to the date of the payment, or would the payment
have retroacted to July 22, 1981?  If MICO accepted the payment in December 1981
and the insured property had not been burned, would that policy not have
expired just the same on July 22, 1982,
pursuant to its original terms, and not on December 24, 1982?

It would seem from MICO’s own theory,
that the policy would have become effective only upon payment, if accepted, and
so would have been valid only from December 24, 1981, but only up to July 22,
1982, according to the original terms. 
In other words, the policy would have run for only eight months although
the premium paid was for one whole year.

It is not disputed that the premium was actually paid by Pinca to Adora on December 24, 1981, who received it
on behalf of MICO, to which it was remitted on January 15, 1982. 
What is questioned is the validity of Pinca’s
payment and of Adora’s authority to receive it.

MICO’s acknowledgment of Adora
as its agent defeats its contention that he was not authorized to receive the
premium payment on its behalf.  It is
clearly provided in Section 306 of the Insurance Code that:

“SEC. 306.  x x
x      x x x     x x x.

“Any insurance company which delivers to an insurance agent or
insurance broker a policy or contract of insurance 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.”

And it is a well-known principle under the law of agency that:

“Payment to an agent having authority to receive or collect
payment is equivalent to payment to the principal himself; such payment is
complete when the money delivered is into the agent’s hands and is a discharge
of the indebtedness owing to the principal.”^[15]

There is the petitioner’s argument, however, that Adora was not authorized to accept the premium payment
because six months had elapsed since the issuance of the insurance policy and
such acceptance was prohibited by the policy itself.  It is argued that this prohibition was
binding upon Pinca, who made the payment to Adora at her own risk as she was bound to first check his
authority to receive it.^[16]

MICO is taking an inconsistent stand.  While contending that acceptance of the
premium payment was prohibited by the policy, it at the same time insists that
the policy never came into force because the premium had not been paid.  One surely cannot have his cake and eat it
too.

We do not share MICO’s view that there
was no existing insurance at the time of the loss sustained by Pinca because her policy never became effective for
non-payment of premium.  Payment was in
fact made, rendering the policy operative as of July 22, 1981, and removing it from the provisions of Article
77.  Thereafter, the policy could be
canceled on any of the supervening grounds enumerated in Article 64 (except
“non-payment of premium”) provided the cancellation was made in
accordance therewith and with Article 65.

Section 64 reads as
follows:

“SEC. 64.  No policy of insurance other than life shall
be cancelled by the insurer except upon prior notice thereof to the insured,
and no notice of cancellation shall be effective unless it is based on the
occurrence, after the effective date of the policy, of one or more of the
following:

“(a) 
non-payment of premium;

“(b)  conviction
of a crime arising out of acts increasing the hazard insured against;

“(c)  discovery
of fraud or material misrepresentation;

“(d)  discovery
of willful or reckless acts or commissions increasing the hazard insured
against;

“(e)  physical
changes in the property insured which result in the property becoming
uninsurable; or

“(f) 
a determination by the Commissioner that the continuation of the
policy would violate or would place the insurer in violation of this
Code.”

As for the method of cancellation, Section 65 provides as
follows:

“SEC. 65.  All notices of cancellation mentioned in the
preceding section shall be in writing, mailed or delivered to the named insured
at the address shown in the policy, and shall state (a) which of the grounds
set forth in section sixty-four is relied upon and (b) that, upon written
request of the named insured, the insurer will furnish the facts on which the
cancellation is based.”

A valid cancellation must, therefore, require concurrence of the
following conditions:

(1)  There must be prior
notice of cancellation to the insured;^[17]

(2)  The notice must be
based on the occurrence, after the effective date of the policy, of one or more
of the grounds mentioned.^[18]

(3)  The notice must be (a)
in writing, (b) mailed, or delivered to the named insured, (c) at the address
shown in the policy;^[19]

(4)  It must state (a)
which of the grounds mentioned in Section 64 is relied upon and (b) that upon
written request of the insured, the insurer will
furnish the facts on which the cancellation is based.^[20]

MICO claims it canceled the policy in question on October 15, 1981, for non-payment of
premium.  To support this assertion, it
presented one of its employees, who testified that “the original of the
endorsement and credit memo” – presumably meaning the alleged cancellation
– “were sent the assured by mail through our mailing section.”^[21]
However, there is no proof that the notice, assuming it complied with the other
requisites mentioned above, was actually mailed to and received by Pinca.  All MICO
offers to show that the cancellation was communicated to the insured is its
employee’s testimony that the said cancellation was sent “by mail through
our mailing section,” without more. 
The petitioner then says that its “stand is enervated (sic) by the
legal presumption of regularity and due performance of duty,”^[22]
(not realizing perhaps that “enervated” means
“debilitated,” not “strengthened”).

On the other hand, there is the flat denial of Pinca, who says she never received the claimed cancellation
and who, of course, did not have to prove such denial.  Considering the strict language of Section 64
that no insurance policy shall be canceled except upon prior notice, it
behooved MICO to make sure that the cancellation was actually sent to and
received by the insured.  The presumption
cited is unavailing against the positive duty enjoined by Section 64 upon MICO
and the flat denial made by the private respondent that she had received notice
of the claimed cancellation.

It stands to reason that if Pinca had
really received the said notice, she would not have made payment on the
original policy on December 24, 1981.  Instead, she would have asked for a new
insurance, effective on that date and until one year later, and so taken
advantage of the extended period.  The
Court finds that if she did pay on that date, it was because she honestly
believed that the policy issued on June 7, 1981, was still in effect and she
was willing to make her payment retroact to July 22, 1981, its stipulated
commencement date.  After all, agent Adora was very accommodating and had earlier told her
“to call him up any time” she was ready with her payment on the policy earlier issued.  She was obviously only reciprocating in kind
when she paid her premium for the period beginning July 22, 1981, and not December 24, 1981.

MICO suggests that Pinca knew the policy had already been canceled and that
when she paid the premium on December 24, 1981, her purpose was “to renew it.” As
this could not be done by the agent alone under the terms of the original
policy, the renewal thereof did not legally bind MICO, which had not ratified
it.  To support this argument, MICO cites
the following exchange:

“Q:   Now, Madam Witness, on December 24, 1981, you made the alleged
payment.  Now, my question is that, did
it not come to your mind that after the lapse of six (6) months, your policy was cancelled?

“A:   I have thought of that but the agent told me
to call him up at anytime.

“Q:   So if you thought that your policy was
already intended to revive cancelled policy?

“O:   Misleading, Your
Honor.

“Heating Officer:  The testimony of witness is that, she thought
of that.

“Q:   I will revise the question.  Now, Mrs. Witness, you stated that you
thought the policy was cancelled.  Now,
when you made the payment of December
24, 1981, your intention was to revive the policy if it was already cancelled?

“A:   Yes,
to renew it.”^[23]

A close study of the above transcript will show that Pinca meant to renew the policy if it had really
been already canceled but not if it was still effective.  It was all conditional.  As it has not been shown that there was a
valid cancellation of the policy, there was consequently no need to renew it
but to pay the premium thereon.  Payment
was thus legally made on the original transaction and it could be, and
was, validly received on behalf of the insurer by its agent Adora.  Adora,
incidentally, had not been informed of the cancellation either and saw no
reason not to accept the said payment.

The last point raised by the petitioner should not pose much
difficulty.  The valuation fixed in fire
insurance policy is conclusive in case of total loss in the absence of fraud,^[24]
which is not shown here.  Loss and its
amount may be determined on the basis of such proof as may be offered by the
insured, which need not be of such persuasiveness as is required in judicial
proceedings.^[25]
If, as in this case, the insured files notice and preliminary proof of loss and
the insurer fails to specify to the former
all the defects thereof and without unnecessary delay, all objections to notice
and proof of loss are deemed waived under Section 90 of the Insurance Code.

The certification^[26]
issued by the Integrated National Police, Lao-ang, Samar, as to the extent of Pinca’s
loss should be considered sufficient. 
Notably, MICO submitted no evidence to the contrary nor did it even
question the extent of the loss in its answer before the Insurance Commission.  It is also worth observing that Pinca’s property was not the only building burned in the
fire that razed the commercial district of Lao-ang, Samar, on January 18, 1982.^[27]

There is nothing in the Insurance Code that makes the
participation of an adjuster in the assessment of the loss imperative or
indispensable, as MICO suggests.  Section
325, which it cites, simply speaks of the licensing and duties of adjusters.

We see in this case an obvious design to evade or at least delay the discharge of a just obligation through
efforts bordering on bad faith if not plain duplicity.  We note that the motion for reconsideration
was filed on the fifteenth day from notice of the decision of the Insurance
Commission and that there was a feeble attempt to show that the notice of denial
of the said motion was not received on June 13, 1982, to further hinder the
proceedings and justify the filing of the petition with this Court fourteen
days after June 18, 1982.  We also look
askance at the alleged cancellation, of which the insured and MICO’s agent himself had no knowledge, and the curious fact
that although Pinca’s payment was remitted to MICO by
its agent on January 15, 1982, MICO sought to return it to Adora
only on February 5, 1982, after it presumably had learned of the occurrence of
the loss insured against on January 18, 1982. 
These circumstances make the motives of the petitioner highly suspect,
to say the least, and cast serious doubts upon its candor and bona fides.

WHEREFORE,
the petition is DENIED.  The decision of the Insurance Commission dated April 10, 1981, and its Order of June 4, 1981, are
AFFIRMED in full, with costs against the petitioner.  This decision is immediately executory.

SO ORDERED.

Teehankee, C.J., Narvasa,
and Paras, JJ., concur.

Gancayco, J., on leave.

---

^[1] I.C.
Case No. 2698.

^[2] Rollo, p. 2.

^[3] Ibid., p. 3.

^[4] Decision, p. 6.

^[5] Ibid.

^[6] Id., p. 19; Rollo, pp. 3, 38.

^[7] Rollo, pp. 3-4.

^[8] Ibid., p. 41.

^[9]
Annex “B”, Petition; Rollo, p. 34.

^[10] Rollo, p. 106.

^[11] Ibid.,
pp. 2, 95, 100

^[12] Id.,
p. 58.

^[13] Id.,
p. 106.

^[14] Id.,
pp. 12-13, 31; Original Records, p. 7.

^[15] Maryland Casualty co. v. U.S., 251 U.S. 342, 64 ed 291, 13
Am. Jur. 2d. p. 630.

^[16] Memorandum for the Petitioner, p. 8.

^[17]
Insurance Code, Sec. 64.

^[18] Ibid.

^[19] Id.,
Sec. 65.

^[20] Id.

^[21] Memorandum for the Petitioner, p. 12.

^[22] Ibid., p. 13.

^[23] Id.,
pp. 13-14.

^[24] Insurance Code, Secs.
171 and 156; Harding v. Commercial Union Insurance
Co., 38 Phil. 484.

^[25] Insurance Code, Sec. 89.

^[26] Exh. “C”.

^[27] Original Records, p. 9.