Digested by: Birondo Subject: Insurance Title: ACME Shoe Rubber & Plastic Corp. vs.

CA Topic: Premiums (Sections 77-82); Effects of non-payment/partial payment Facts: Petitioner ACME had been insuring its properties yearly against fire with Domestic Insurance Company (INSURER). It continued the insurance for the period of May 15, 1962 up to May 15, 1963 for the amount of P200,000. On January 8, 1964, ACME only paid P3,331.26, which the INSURER applied as renewal premium for the period May 15, 1963 to May 15, 1964 and the issued renewal receipt having a stamp thereon that it is subject to Receipt of Payment Clause and Credit Agreement both attached as riders. The former clause declared that the insurance will be deemed valid and binding upon the company only when the premium and documentary stamps have actually been paid; the latter provided that the premium corresponding to the first 90 days of the policys term or any renewal is considered paid for the purpose of only making said policy valid and binding during said portion of the term and it shall automatically become void and ineffective (without prejudice to the obligation of the insured to pay the corresponding short premium for the said 90 days) unless prior to the expiration of said period the INSURED shall have actually paid to the Company the total premium and the documentary stamps. Then, ACME, through its President, signed a promissory note on May 26, 1964 promising to pay the INSURER within 90 days from the effective date of the Policy (May 15, 1964) the premium and documentary stamps (P3,331.26) and failure to pay when due, it is agreed that said policy should stand automatically cancelled. A fire completely destroyed ACMEs properties on October13, 1964 prompting it to file a claim against the INSURER which however disclaimed liability on the ground that as of the date of loss, the properties burned were no covered by insurance. ACME has obtained a favorable decision in the trial court when it sued for collection of insurance proceeds and damages however the same was reversed by the CA affirming the INSURERs contention and thus it could not be held liable for any indemnity. Issue: Whether or not there was an insurance contract at the moment of the loss. Ruling: CA is sustained. ACME, through its President, was fully aware that the policy would automatically be cancelled if it will not pay the premium before August 13, 1964 (90 th day from May 14, 1964). In fact, reminders for payment being sent were unheeded. Not having paid the 1964-1965 premium within the extension granted, and pursuant to RA No. 3450, the policy was automatically cancelled and there was no insurance coverage to speak of as of the date of the fire. It was also ACMEs contention that the INSURER which accepted the one-year premium on January 8, 1964, has no right to apply it to the payment of a period of coverage prior thereto for the policy was void under RA 3450 (Sec. 72. xxx. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid). However, since said Act was approved only on June 20, 1963 and was put into effect only on October 1, 1963, it could not retroactively affect the renewal of the insurance policy on May 15, 1963. So, ACMEs premium payment of January 8, 1964 was properly applied to the 1963-1964 premium. Lastly, ACMEs claim that the INSURER would unjustly enrich itself if it were to be allowed to apply the one-year premium it received to a past period when the policy was void and the INSURER had incurred no risk is flawed for the reason already stated that the renewal receipts were issued before RA 3450 was approved and implemented. It is axiomatic that laws have no retroactive effect unless the contrary is provided. What became automatically cancelled by RA 3450 was the 1964-1965 policy for ACMEs failure to pay the premium within the 90-day extension granted and in accordance with the express terms of the promissory note it had signed. Judgment affirmed.