FACTS:
Petitioner Makati Tuscany Condominium Corporation (TUSCANY) obtained an insurance policy from private respondent American Home Assurance Co. (AHAC) for a one-year period. The premium for the policy was paid in installments and accepted by AHAC. The policy was renewed twice, each time with the premium being paid in installments. However, TUSCANY refused to pay the balance of the premium after making two installment payments for the third renewal. AHAC then filed an action to recover the unpaid balance. TUSCANY argued that the policy was not valid and binding and that no risk attached to it because the receipt contained certain reservations. The trial court dismissed the complaint and counterclaim, finding that there was risk attached to the policy despite the reservations. Both parties appealed, and the Court of Appeals modified the trial court's decision, ordering TUSCANY to pay the balance of the premiums due.
ISSUES:
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Whether payment by installment of the premiums due on an insurance policy invalidates the contract of insurance.
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Whether the reservations in the receipts issued for the premium payments affect the validity of the insurance policy.
RULING:
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Payment by installment of the premiums due on an insurance policy does not invalidate the contract of insurance.
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The reservations in the receipts issued for the premium payments do not affect the validity of the insurance policy.
PRINCIPLES:
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Payment by installment of premiums on an insurance policy is allowed under Section 77 of the Insurance Code.
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Reservations in receipts for premium payments do not affect the validity of an insurance policy if the payments were made during the term of the policy.