Case No.

45
South Sea Surety and Insurance Company, Inc., vs. Court of Appeals
G.R. No. 102253; June 2, 1995

Topic: Premium Payments

Facts:

Valenzuela Hardwood and Industrial Supply, Inc., undertook to deliver lauan round logs to Manila. The
logs were transported via M/V Seven Ambassador owned by Seven Brothers. On January 20, 1984,
Valenzuela Hardwood insured the cargo for PHP 2,000,000.00 with South Sea Surety and Insurance
Company, Inc., as the insurer. The latter issued a marine insurance policy covering the cargo on the same
day. On January 24, 1984, a check was delivered to Victorio Chua for the payment of the insurance
premium. On January 25, 2017, the ship containing the cargo sank. On January 30, 2017, the check
covering the premium payment to the insurer by Victorio Chua. However, the tender was not accepted by
the insurer and the policy was cancelled due to non-payment of premiums. The claim for the loss of the
cargo was eventually denied by South Sea Surety.

Issue:

Whether or not there was a valid premium payment when the check was delivered to Victorio Chua?

Held:

Yes. There was a valid premium payment when Valenzuela Hardwood delivered the check to Victorio
Chua because the latter is deemed to be an agent of South Sea Surety and Insurance Company, Inc.

Section 306 of the Insurance Code provides that when an insurer delivers an insurance policy to an
insurance agent or insurance broker, it is deemed that the insurer has authorized such agent or broker to
receive premium payments on behalf of the insurer.

South Sea Surety delivered the policy to Victorio Chua. Given this, the insurer authorized Mr. Chua to
also accept premium payments from Valenzuela Hardwood. Therefore, at the time of the loss, there was
already premium payment made by Valenzueal Hardwood to South Sea Surety.