[G.R. No. 137172. June 15, 1999.

UCPB GENERAL INSURANCE CO.,

INC., petitioner, vs. MASAGANA TELAMART, INC., respondent.

Abello, Concepcion, Regala and Cruz for petitioner.

Arturo S. Santos for respondent.

SYNOPSIS

On April 15, 1991, petitioner issued five (5) insurance policies covering
respondent's various properties against fire. On April 6, 1992, petitioner gave
written notice to respondent of the non-renewal of the policies. On June 13, 1992,
fire razed respondent's property covered by three of the insurance policies
petitioner issued. On July 13, 1992, respondent presented to petitioner's cashier
five (5) manager's checks representing premium for the renewal of the policies
from May 22, 1992 to May 22, 1993. No notice of loss was filed by respondent
under the policies prior to July 14, 1992. On July 14, 1992, respondent filed with
petitioner its claim for indemnification of the insured property razed by fire. On the
same day, petitioner returned to respondent the manager's checks it tendered
and at the same time rejected its claim. Respondent thus filed a civil complaint
against petitioner with the Regional Trial Court (RTC) for recovery of the face value
of the policies. The RTC rendered judgment in favor of the plaintiff. The Court of
Appeals affirmed the decision rendered by the RTC. Hence, this appeal. CDASIA

The Court reversed the decision of the Court of Appeals. It held that an
insurance policy, other than life, issued originally or on renewal, is not valid and
binding until actual payment of the premium. Any agreement to the contrary is
void. The parties may not agree expressly or impliedly on the extension of credit
or time to pay the premium and consider the policy binding before actual
payment.

SYLLABUS

1. MERCANTILE LAW; INSURANCE; NO INSURANCE CONTRACT,

OTHER THAN LIFE, IS VALID AND BINDING UNTIL ACTUAL PAYMENT OF
PREMIUM. — An insurance policy, other than life, issued originally or on renewal,
is not valid and binding until actual payment of the premium. Any agreement to
the contrary is void. The parties may not agree expressly or impliedly on the
extension of credit or time to pay the premium and consider the policy binding
before actual payment. cdasia

2. ID.; ID.; ID.; CASE AT BAR. — The case of Malayan Insurance Co., Inc. vs.
Cruz-Arnaldo, cited by the Court of Appeals, is not applicable. In that case,
payment of the premium was in fact actually made on December 24, 1981, and
the fire occurred on January 18, 1982. Here, the payment of the premium for
renewal of the policies was tendered on July 13, 1992, a month after the fire
occurred on June 13, 1992. The assured did not even give the insurer a notice of
loss within a reasonable time after occurrence of the fire.

DECISION

PARDO, J : p

The case is an appeal via certiorari seeking to set aside the decision of the
Court of Appeals, 1 affirming with modification that of the Regional Trial Court,
Branch 58, Makati, ordering petitioner to pay respondent the sum of
P18,645,000.00, as the proceeds of the insurance coverage of respondent's
property razed by fire; 25% of the total amount due as attorney's fees and
P25,000.00 as litigation expenses, and costs. prLL

The facts are undisputed and may be related as follows:

On April 15, 1991, petitioner issued five (5) insurance policies covering
respondent's various property described therein against fire, for the period from
May 22, 1991 to May 22, 1992.
In March 1992, petitioner evaluated the policies and decided not to renew
them upon expiration of their terms on May 22, 1992. Petitioner advised
respondent's broker, Zuellig Insurance Brokers, Inc. of its intention not to renew
the policies.
On April 6, 1992, petitioner gave written notice to respondent of the non-
renewal of the policies at the address stated in the policies.
On June 13, 1992, fire razed respondent's property covered by three of the
insurance policies petitioner issued.
On July 13, 1992, respondent presented to petitioner's cashier at its head
office five (5) manager's checks in the total amount of P225,753.95, representing
premium for the renewal of the policies from May 22, 1992 to May 22, 1993. No
notice of loss was filed by respondent under the policies prior to July 14, 1992.
 On July 14, 1992, respondent filed with petitioner its formal claim for
indemnification of the insured property razed by fire. LibLex

On the same day, July 14, 1992, petitioner returned to respondent the five
(5) manager's checks that it tendered, and at the same time rejected respondent's
claim for the reasons (a) that the policies had expired and were not renewed, and
(b) that the fire occurred on June 13, 1992, before respondent's tender of premium
payment.
On July 21, 1992, respondent filed with the Regional Trial Court, Branch 58,
Makati City, a civil complaint against petitioner for recovery of P18,645,000.00,
representing the face value of the policies covering respondent's insured property
razed by fire, and for attorney's fees. 2
On October 23, 1992, after its motion to dismiss had been denied, petitioner
filed an answer to the complaint. It alleged that the complaint "fails to state a
cause of action"; that petitioner was not liable to respondent for insurance
proceeds under the policies because at the time of the loss of respondent's
property due to fire, the policies had long expired and were not renewed. 3
After due trial, on March 10, 1993, the Regional Trial Court, Branch 58,
Makati, rendered decision, the dispositive portion of which reads: cdasia

"WHEREFORE, premises considered, judgment is hereby

rendered in favor of the plaintiff and against the defendant, as follows.
"(1) Authorizing and allowing the plaintiff to consign/deposit with this
Court the sum of P225,753.95 (refused by the defendant) as full
payment of the corresponding premiums for the replacement-
renewal policies for Exhibits A, B, C, D and E;
"(2) Declaring plaintiff to have fully complied with its obligation to pay the
premium thereby rendering the replacement-renewal policy of
Exhibits A, B, C, D and E effective and binding for the duration
May 22, 1992 until May 22, 1993; and, ordering defendant to
deliver forthwith to plaintiff the said replacement-renewal policies;
"(3) Declaring Exhibits A & B, in force from August 22, 1991 up to August
23, 1992 and August 9, 1991 to August 9, 1992, respectively; and
"(4) Ordering the defendant to pay plaintiff the sums of: (a)
P18,645,000.00 representing the latter's claim for indemnity under
Exhibits A, B & C and/or its replacement-renewal policies; (b) 25%
of the total amount due as and for attorney's fees; (c) P25,000.00
as necessary litigation expenses; and, (d) the costs of suit.
"All other claims and counterclaims asserted by the parties are
denied and/or dismissed, including plaintiffs claim for interests.
 "SO ORDERED.
"Makati, Metro-Manila, March 10, 1993.
"ZOSIMO Z. ANGELES
Judge." 4
In due time, petitioner appealed to the Court of Appeals. 5
On September 7, 1998, the Court of Appeals promulgated its
decision 6 affirming that of the Regional Trial Court with the modification that item
No. 3 of the dispositive portion was deleted, and the award of attorney's fees was
reduced to 10% of the total amount due. 7
The Court of Appeals held that following previous practise, respondent was
allowed a sixty (60) to ninety (90) day credit term for the renewal of its policies,
and that the acceptance of the late premium payment suggested an
understanding that payment could be made later.
Hence, this appeal.
By resolution adopted on March 24, 1999, we required respondent to
comment on the petition, not to file a motion to dismiss within ten (10) days from
notice. 8 On April 22, 1999, respondent filed its comment. 9
Respondent submits that the Court of Appeals correctly ruled that no timely
notice of non-renewal was sent. The notice of non-renewal sent to broker Zuellig
which claimed that it verbally notified the insurance agency but not respondent
itself did not suffice. Respondent submits further that the Court of Appeals did
not err in finding that there existed a sixty (60) to ninety (90) days credit agreement
between UCPB andMasagana, and that, finally, the Supreme Court could not
review factual findings of the lower court affirmed by the Court of Appeals. 10
We give due course to the appeal.
The basic issue raised is whether the fire insurance policies issued by
petitioner to the respondent covering the period May 22, 1991 to May 22, 1992,
had expired on the latter date or had been extended or renewed by an implied
credit arrangement though actual payment of premium was tendered on a latter
date after the occurrence of the risk (fire) insured against. prLL

The answer is easily found in the Insurance Code. No, an insurance policy,
other than life, issued originally or on renewal, is not valid and binding until actual
payment of the premium. Any agreement to the contrary is void. 11 The parties
may not agree expressly or impliedly on the extension of credit or time to pay the
premium and consider the policy binding before actual payment. llcd
 The case of Malayan Insurance Co., Inc. vs. Cruz-Arnaldo, 12 cited by the
Court of Appeals, is not applicable. In that case, payment of the premium was in
fact actually made on December 24, 1981, and the fire occurred on January 18,
1982. Here, the payment of the premium for renewal of the policies was tendered
on July 13, 1992, a month after the fire occurred on June 13, 1992. The assured
did not even give the insurer a notice of loss within a reasonable time after
occurrence of the fire.
WHEREFORE, the Court hereby REVERSES and SETS ASIDE the decision
of the Court of Appeals in CA-G.R. CV No. 42321. In lieu thereof, the Court renders
judgment dismissing respondent's complaint and petitioner's counterclaims
thereto filed with the Regional Trial Court, Branch 58, Makati City, in Civil Case
No. 92-2023. Without costs. prLL

SO ORDERED.
(UCPB General Insurance Co., Inc. v. Masagana Telamart, Inc., G.R. No.
|||

137172, [June 15, 1999], 367 PHIL 539-545)