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Insurance Case Digest: Philippine Pryce Assurance Corp. v. CA (1994)

G.R. No. 107062 February 21, 1994
Lessons Applicable: Acceptance by obligee by surety bond (Insurance)
Laws Applicable: Sec. 177 of the Insurance Code


  • Gegroco, Inc filed for a collection of the issued surety bond for P500K and P1M by Interworld Assurance Corporation (now Philippine Pryce Assurance Corporation) in behalf of its principal Sagum General Merchandise 
  • RTC: favored Gegroco, Inc
  • CA: affirmed RTC
    • Interworld: checks issued by its principal which were supposed to pay for the premiums bounced and it was not yet authorized by the Insurance Commission to issue surety bonds
ISSUE: W/N Interworld Assurance Corp. should be liable for the surety bond that it issued as payment for the premium

HELD: YES. RTC and CA: confirmed

  • Interworld did not and never attempted to pay the requisite docket fee and was not present during the scheduled pre-trial so it is as if third-party complaint was never filed
  • Sec. 177.   The surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding unless and until the premium therefor has been paid, except where the obligee has accepted the bond, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety
  • Interworld's defense that it did not have authority to issue a Surety Bond when it did is an admission of fraud committed against Gegroco.  No person can claim benefit from the wrong he himself committed.  A representation made is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.