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2 D (XV) Paulino vs. The Capital Insurance

Capital Insurance was not liable for the fire damage to Leona Paulino's property. The insurance policy allowed either party to terminate the policy at any time. Paulino had sent a letter to Capital Insurance requesting cancellation of the policy, which terminated the policy according to its terms. Paulino did not return the policy or request a refund of the unused premium payment. The court ruled that based on the language of the policy, Paulino's letter was enough to unilaterally terminate the policy, so Capital Insurance was not liable for damages from the subsequent fire.

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Junmer Ortiz
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215 views1 page

2 D (XV) Paulino vs. The Capital Insurance

Capital Insurance was not liable for the fire damage to Leona Paulino's property. The insurance policy allowed either party to terminate the policy at any time. Paulino had sent a letter to Capital Insurance requesting cancellation of the policy, which terminated the policy according to its terms. Paulino did not return the policy or request a refund of the unused premium payment. The court ruled that based on the language of the policy, Paulino's letter was enough to unilaterally terminate the policy, so Capital Insurance was not liable for damages from the subsequent fire.

Uploaded by

Junmer Ortiz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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2 d(xv) LEONA PAULINO vs. THE CAPITAL INSURANCE & SURETY COMPANY, INC.

 No. L-11728, May 15, 1959


Effect of certain stipulations in policy

FACTS: This is an appeal from the decision of the CFI of Albay, dismissing an action for
recovery of amount of fire insurance policy. Paulino was the owner of the JUNIOR CAFE,
BAKERY & GROCERY STORE. She accepted a fire insurance policy issued by the defendant
and however, the plaintiff wrote the defendant requesting cancellation of the policy,
which the latter received. The plaintiff did not return the policy or demanded for the
return of the proportionate premium and neither did the defendant offer to return the
premium. Unfortunately, the property covered by the policy was destroyed by fire. The
defendant refused to make payment on plaintiff's claim, on the ground that the policy
was cancelled already. Plaintiff contends in this appeal that her letter was a mere
request or offer to cancel the policy and did not terminate the same since it was not
accompanied by the surrender of the policy for cancellation.

ISSUE: Whether Capital Insurance was liable


RULING: NO. This case hinges on the interpretation of paragraph 10 of the policy,
reading: “This insurance may be terminated at any time at the request of the Insured, in
which case the Company will retain the customary short period rate for the time the
policy has been in force. This insurance may also at anytime be terminated at the option
of the Company, on notice to that effect being given to the Insured, in which case the
Company shall be liable to repay on demand a ratable proportion of the premium for the
expired term from the date of cancellation."
Pursuant to this stipulation, the contract in question could be terminated, "at any time",
upon the unilateral act of either party. Whichever party exercised the "option", did not
need the approval, consent or concurrence of the other thereto.That consent was given
at the time of the making of the contract. Moreover, pursuant to her letter, plaintiff
considered the contract terminated upon receipt of said letter by the defendant ("desde
el recibo de la presente).
Furthermore, the case of Buckley vs. Citizens Insurance Co. (81 N.E. 165) relied upon by
the plaintiff is not in point.Although the insurance policy involved in that case contained
a clause analogous to the one involved here, the option was exercised therein, not by
the insured, but by the insurance company, which likewise, requested the return of the
policy.Upon receipt of the communication of the company to this effect, the insured
returned the policy. Subsequently, but before the corresponding portion of the premium
had been refunded to the insured, the property was destroyed by fire.Upon these facts,
the insured was not entitled to collect the amount of the policy, because the
unconditional return thereof upon request of the company implied "a waiver of his right
to treat the policy as in full force and effect until the company paid or tendered to him
the unearned premium."

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