[No. L-14373.

January 30, 1960]

GENERAL INSURANCE & SURETY CORPORATION, petitioner, vs. NG HUA,
respondent.
INSURANCE; CO-INSURANCE; BREACH OF WARRANTY.—Violation of a
warranty that there were no other insurances on the property insured entitles the insurer
to rescind.

PETITION for review by certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.
José P. Bengzon, Guido Advíncula and Potenciano Vil-legas, Jr. for petitioner.
Crispín D. Baizas for respondent.

BENGZON, J.:

Suit to recover on a fire insurance policy. The insurer presented several defenses in
the Manila court of first instance. After trial, it was required to pay.
On appeal to the Court of Appeals, the judgment was affirmed.
This is now -a revision on certiorari, upon the insurer's insistence on two of its
main defenses: prescription and breach of warranty.
The principal facts on which adjudication may rest are these:
On April 15, 1952, the defendant General Insurance & Surety Corporation issued
its Insurance Policy No. 471, insuring against fire, for one year, the stock in trade of
the Central Pomade Factory owned by Ng Hua, the
1118
1118 PHILIPPINE
REPORTS
ANNOTATED
Gen. Insurance & Surety
Corp. vs. Ng Hua
insured. The next day, the Pomade Factory building burned, resulting in destruction
by fire of the insured properties. Ng Hua claimed indemnity from the insurer. The
policy covered damages up to P10,000.00; but after some negotiations and upon
suggestion of the Manila Adjustment Company, he reduced the claim to P5,000.00.
Nevertheless, the defendant insurer refused to pay for various reasons, namely (a)
action was not filed in time; (b) violation of warranty; (c) submission of fraudulent
claim; and (d) failure to pay the premium.
The aforesaid Policy No. 471 contains this stipulation printed on the back thereof;
"3. The Insured shall give notice to the company of any insurance or insurances already
effected, or which may subsequently be effected, covering any of the property hereby insured,
and unless such notice be given and the particulars of such insurance or insurances be stated
in or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss
or damage, all benefits under this Policy shall be forfeited." (Italics Ours.)

The face of the policy bore the annotation: "Co-Insurance Declared—NIL"

It is undenied that Ng Hua had obtained fire insurance on the same goods, for the
same period of time, in the amount of P20,000.00 from General Indemnity Co.
However, the Court of Appeals, referring to the annotation and overruling the
defense, held there was no violation of the above clause, inasmuch as "co-insurance
exists when a condition of the policy requires the insured to bear ratable proportion
of the loss when the value of the insured property exceeds the face value of the policy,"
hence there is no co-insurance here.
Discussion—Undoubtedly, co-insurance exists under the condition described by
the appellate court. But that is one kind of co-insurance. It is not the only situation
where coinsurance exists. Other insurers of the same property
1119
VOL. 106, JANUARY 1119
30, 1960
Gen. Insurance & Surety
Corp. vs. Ng Hua
against the same hazard are sometimes referred to as coinsurers and the ensuing
combination as co-insurance. And considering the terms of the policy which required
1

the insured to declare other insurances, the statement in question must be deemed
to be a statement (warranty) binding on both insurer and insured, that there were no
other insurance on the property. Remember it runs "Co-
Insurance declared"; emphasis on the last word. If "Co-insurance" means what the
Court of Appeals says, the annotation served no purpose. It would even be contrary
to the policy itself, which in its clause No, 17 made the insured a co-insurer for the
excess of the value of the property over the amount of the policy.
The annotation then, must be deemed to be a warranty that the property was not
insured by any other policy. Violation thereof entitles the insurer to rescind. (Sec. 69.
Insurance Act) Such misrepresentation is fatal in the light of our views in Santa
Ana vs. Commercial Union Assurance Company, Ltd., 55 Phil. 329. The materiality
of non-disclosure of other insurance policies is not open to doubt.
Furthermore, even if the annotation were overlooked, the defendant insurer would
still be free from liability because there is no question that the policy issued by
_______________

1 Where the same person is insured by several insurers separately in respect to the same subject and

interest, there is double insurance under our statute (sec. 86, Insurance Law). The situation is also
sometimes described in the texts and cases as concurrent insurance, additional or other insurance, or
coinsurance. See Ocean S. S. Co. vs. Aetna Ins. Co., 121 Federal Reporter, 882, 887, Fidelity & Casualty
Co. vs. Firemen's Fund, 100 Pac. (2nd series) 364, 366. Textbooks and treatises in their indexes, list
additional insurance, other insurance, and concurrent insurance under "co-insurance." See Vance on
Insurance; Couch, Cyclopedia on Insurance); Appelman-Law on Insurance. See specially Vance on
Insurance 2nd Ed. p. 78; Oppenheim vs. Firemen's Fund, 138 NW. 777 referred to special conditions in
Minnesota.

1120
1120 PHILIPPINE
REPORTS
ANNOTATED
Gen. Insurance & Surety
Corp. vs. Ng Hua
General Indemnity has not been stated in nor endorsed on Policy No. 471 of
defendant. And as stipulated in the above-quoted provisions of such policy "all benefit
under this policy shall be forfeited." 2

To avoid the disastrous effect of the misrepresentation or concealment of the other

insurance policy, Ng Hua alleges "actual knowledge" on the part of General Insurance
of the fact that he had taken out additional insurance with General Indemnity. He
does not say when such knowledge was acquired or imparted. If General Insurance
knew before issuing its policy or before the fire, such knowledge might overcome the
insurer's defense. However, the Court of Appeals found no evidence of such
3

knowledge. We have read the pages of the stenographic notes cited by Ng Hua and
all we gather is evidence of the existence of the insurance with General Indemnity
Company. As to knowledge of General Insurance before issuance of its policy or the
fire, there was none.
Indeed, this concealment and violation was expressly set up as a special defense
in the answer. Yet plaintiff did not, in avoidance, reply nor assert such knowledge.
And it is doubtful whether evidence on the point would be admissible under the
pleadings. (See Rule 11, sec. 1.)
All the above considerations lead to the conclusion that the defendant insurer
succesfully established its defense of warranty breach or concealment of the other
insurance and/or violation of the provision of the policy abovementioned.
Having reached this conclusion, we deem it unnecessary to discuss the other
defenses.
Wherefore, the judgment under review will be revoked, and the defendant insurer
(herein petitioner) acquitted
________________

2 A policy may declare that a violation of specified provisions thereof shall avoid it. (sec. 70, Insurance

Law).
3 La O vs. Yek Tong Lim Fire & Marine Insurance Co. 55 Phil., 386.

1121
VOL. 106, JANUARY 1121
30, 1960
Castillo, et al. vs. Hon.
Bayona and Arzaga-Gallardo
from all the liability under the policy. Costs against respondent. So ordered.
 G.R. No. 95546.November 6, 1992. *

MAKATI TUSCANY CONDOMINIUM CORPORATION, petitioner,vs. THE COURT

OF APPEALS, AMERICAN HOME ASSURANCE CO., represented by American
International Underwriters (Phils.), Inc., respondent.
Insurance Law; Court holds that the subject policies are valid even if the premiums were
paid on installments.—We hold that the subject policies are valid even if the premiums were
paid on installments. The records clearly show that petitioner and private respon-
_______________

* FIRST DIVISION.

463

VOL.215,NOVEMBER6,1992 463
Makati Tuscany Condominuim Corp. vs.
Court of Appeals
dent intended subject insurance policies to be binding and effective notwithstanding the
staggered payment of the premiums. The initial insurance contract entered into in 1982 was
renewed in 1983, then in 1984. In those three (3) years, the insurer accepted all the
installment payments. Such acceptance of payments speaks loudly of the insurer’s intention
to honor the policies it issued to petitioner. Certainly, basic principles of equity and fairness
would not allow the insurer to continue collecting and accepting the premiums, although paid
on installments, and later deny liability on the lame excuse that the premiums were not
prepaid in full.
Same; Same; Where the risk is entire and the contract is indivisible, the insured is not
entitled to a refund of the premiums paid if the insurer was exposed to the risk insured for any
period however brief or momentary.—It appearing from the peculiar circumstances that the
parties actually intended to make the three (3) insurance contracts valid, effective and
binding, petitioner may not be allowed to renege on its obligation to pay the balance of the
premium after the expiration of the whole term of the third policy (No. AH-CPP-9210651) in
March 1985. Moreover, as correctly observed by the appellate court, where the risk is entire
and the contract is indivisible, the insured is not entitled to a refund of the premiums paid if
the insurer was exposed to the risk insured for any period, however brief or momen tary.

PETITION to review the judgment of the Court of Appeals. Gonzaga-Reyes,J.

The facts are stated in the opinion of the Court.

Agcaoili & Associates for petitioner.
Salonga & Associates for private respondent.

BELLOSILLO,J.:

This case involves a purely legal question: whether payment by installment of the
premiums due on an insurance policy invalidates the contract of insurance, in view
of Sec. 77 of P.D. 612, otherwise known as the Insurance Code, as amended, which
provides:
“SECTION77.An insurer is entitled to the payment of the premium as soon as the thing is
exposed to the peril insured against.
 464
464 SUPREME COURT
REPORTS
ANNOTATED
Makati Tuscany
Condominuim Corp. vs.
Court of Appeals
Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by
an insurance company is valid and binding unless and until the premium thereof has been
paid, except in the case of a life or an industrial life policy whenever the grace period provision
applies.”

Sometime in early 1982, private respondent American Home Assurance Co. (A H A

C), represented by American International Underwriters (Phils.), Inc., issued in favor
of petitioner Makati Tuscany Condominium Corporation (TUSCANY) Insurance
Policy No. AH-CPP-9210452 on the latter’s building and premises, for a period
beginning 1 March 1982 and ending 1 March 1983, with a total premium of
P466,103.05. The premium was paid on installments on 12 March 1982, 20 May 1982,
21 June 1982 and 16 November 1982, all of which were accepted by private
respondent.
On 10 February 1983, private respondent issued to petitioner Insurance Policy No.
AH-CPP-9210596, which replaced and renewed the previous policy, for a term
covering 1 March 1983 to 1 March 1984. The premium in the amount of P466,103.05
was again paid on installments on 13 April 1983, 13 July 1983, 3 August 1983, 9
September 1983, and 21 November 1983. All payments were likewise accepted by
private respondent.
On 20 January 1984, the policy was again renewed and private respondent issued
to petitioner Insurance Policy No. AH-CPP-9210651 for the period 1 March 1984 to 1
March 1985. On this renewed policy, petitioner made two installment payments, both
accepted by private respondent, the first on 6 February 1984 for P52,000.00 and the
second, on 6 June 1984 for P100,000.00. Thereafter, petitioner refused to pay the
balance of the premium.
Consequently, private respondent filed an action to recover the unpaid balance of
P314,103.05 for Insurance Policy No. AH-CPP-9210651.
In its answer with counterclaim, petitioner admitted the issuance of Insurance
Policy No. AH-CPP-9210651. It explained that it discontinued the payment of
premiums because the policy did not contain a credit clause in its favor and the
receipts for the installment payments covering the policy for 1984-85 as
465
VOL.215,NOVEMBER6,1992 465
Makati Tuscany Condominuim
Corp. vs. Court of Appeals
well as the two (2) previous policies, stated the following reservations:
 1. “2.Acceptance of this payment shall not waive any of the company rights to
deny liability on any claim under the policy arising before such payments or
after the expiration of the credit clause of the policy; and
2. “3.Subject to no loss prior to premium payment. If there be any loss such is not
covered.”

Petitioner further claimed that the policy was never binding and valid, and no risk
attached to the policy. It then pleaded a counterclaim for P152,000.00 for the
premiums already paid for 1984-85, and in its answer with amended counterclaim,
sought the refund of P924,206.10 representing the premium payments for 1982-85.
After some incidents, petitioner and private respondent moved for summary
judgment.
On 8 October 1987, the trial court dismissed the complaint and the counterclaim
upon the following findings:
“While it is true that the receipts issued to the defendant contained the aforementioned
reservations, it is equally true that payment of the premiums of the three aforementioned
policies (being sought to be refunded) were made during the lifetime or term of said policies,
hence, it could not be said, inspite of the reservations, that no risk attached under the policies.
Consequently, defendant’s counter-claim for refund is not justified.
“As regards the unpaid premiums on Insurance Policy No. AH-CPP-9210651, in view of
the reservation in the receipts ordinarily issued by the plaintiff on premium payments the
only plausible conclusion is that plaintiff has no right to demand their payment after the
lapse of the term of said policy on March 1, 1985. Therefore, the defendant was justified in
refusing to pay the same.” 1

Both parties appealed from the judgment of the trial court. Thereafter, the Court of
Appeals rendered a decision modify-
2

_______________

Rollo, p. 85.
1

Penned by Mme. Justice Minerva P. Gonzaga-Reyes, concurred by Mr. Justice Ricardo J. Francisco and
2

Mme. Justice Salome A.

466
466 SUPREME COURT
REPORTS
ANNOTATED
Makati Tuscany
Condominuim Corp. vs.
Court of Appeals
ing that of the trial court by ordering herein petitioner to pay the balance of the
premiums due on Policy No. AH-CPP-921-651, or P314,103.05 plus legal interest
until fully paid, and affirming the denial of the counterclaim. The appellate court
thus explained—
“The obligation to pay premiums when due is ordinarily as indivisible obligation to pay the
entire premium. Here, the parties herein agreed to make the premiums payable in
installments, and there is no pretense that the parties never envisioned to make the
insurance contract binding between them. It was renewed for two succeeding years, the
second and third policies being a renewal/replacement for the previous one. And the insured
never informed the insurer that it was terminating the policy because the terms were
unacceptable.
“While it may be true that under Section 77 of the Insurance Code, the parties may not
agree to make the insurance contract valid and binding without payment of premiums, there
is nothing in said section which suggests that the parties may not agree to allow payment of
the premiums in installment, or to consider the contract as valid and binding upon payment
of the first premium. Otherwise, we would allow the insurer to renege on its liability under
the contract, had a loss incurred (sic) before completion of payment of the entire premium,
despite its voluntary acceptance of partial payments, a result eschewed by basic
considerations of fairness and equity.
“To our mind, the insurance contract became valid and binding upon payment of the first
premium, and the plaintiff could not have denied liability on the ground that payment was
not made in full, for the reason that it agreed to accept installment payments. x x x”
3

Petitioner now asserts that its payment by installment of the premiums for the
insurance policies for 1982, 1983 and 1984 invalidated said policies because of the
provisions of Sec. 77 of the Insurance Code, as amended, and by the conditions
stipulated by the insurer in its receipts, disclaiming liability for loss occurring before
payment of premiums.
It argues that where the premium is not actually paid in full, the policy would only
be effective if there is an acknowledgment Montoya.
_______________

3 Decision, pp. 6-7; Rollo, pp. 36-37.

467
VOL.215,NOVEMBER6,1992 467
Makati Tuscany Condominuim
Corp. vs. Court of Appeals
in the policy of the receipt of premium pursuant to Sec. 78 of the Insurance Code. The
absence of an express acknowledgment in the policies of such receipt of the
corresponding premium payments, and petitioner’s failure to pay said premiums on
or before the effective dates of said policies rendered them invalid. Petitioner thus
concludes that there cannot be a perfected contract of insurance upon mere partial
payment of the premiums because under Sec. 77 of the Insurance Code, no contract
of insurance is valid and binding unless the premium thereof has been paid,
notwithstanding any agreement to the contrary. As a consequence, petitioner seeks
a refund of all premium payments made on the alleged invalid insurance policies.
We hold that the subject policies are valid even if the premiums were paid on
installments. The records clearly show that petitioner and private respondent
intended subject insurance policies to be binding and effective notwithstanding the
staggered payment of the premiums. The initial insurance con-tract entered into in
1982 was renewed in 1983, then in 1984. In those three (3) years, the insurer accepted
all the installment payments. Such acceptance of payments speaks loudly of the
insurer’s intention to honor the policies it issued to petitioner. Certainly, basic
principles of equity and fairness would not allow the insurer to continue collecting
and accepting the premiums, although paid on installments, and later deny liability
on the lame excuse that the premiums were not prepaid in full.
We therefore sustain the Court of Appeals. We quote with approval the well-
reasoned findings and conclusion of the appellate court contained in its Resolution
denying the motion to reconsider its Decision—
“While the import of Section 77 is that prepayment of premiums is strictly required as a
condition to the validity of the contract, We are not prepared to rule that the request to make
installment payments duly approved by the insurer, would prevent the entire contract of
insurance from going into effect despite payment and acceptance of the initial premium or
first installment. Section 78 of the Insurance Code in effect allows waiver by the insurer of
the condition of prepayment by making an acknowledgment in the insurance policy of receipt
of premium as conclusive evidence of payment so far as to make the policy binding despite
the fact that premium is actually unpaid. Section 77 merely precludes the parties from
stipulating that the
468
468 SUPREME COURT
REPORTS
ANNOTATED
Makati Tuscany
Condominuim Corp. vs.
Court of Appeals
policy is valid even if premiums are not paid, but does not expressly prohibit an agreement
granting credit extension, and such an agreement is not contrary to morals, good customs,
public order or public policy (De Leon, the Insurance Code, at p. 175). So is an understanding
to allow insured to pay premiums in installments not so proscribed. At the very least, both
parties should be deemed in estoppel to question the arrangement they have voluntarily
accepted.”4

The reliance by petitioner on Arce v. Capital Surety and Insurance Co. is unavailing
5

because the facts therein are substantially different from those in the case at bar.
In Arce, no payment was made by the insured at all despite the grace period given.
In the case before Us, petitioner paid the initial installment and thereafter made
staggered payments resulting in full payment of the 1982 and 1983 insurance
policies. For the 1984 policy, petitioner paid two (2) installments although it refused
to pay the balance.
It appearing from the peculiar circumstances that the parties actually intended to
make the three (3) insurance contracts valid, effective and binding, petitioner may
not be allowed to renege on its obligation to pay the balance of the premium after the
expiration of the whole term of the third policy (No. AH-CPP-9210651) in March 1985.
Moreover, as correctly observed by the appellate court, where the risk is entire and
the contract is indivisible, the insured is not entitled to a refund of the premiums paid
if the insurer was exposed to the risk insured for any period, however brief or
momentary.
 WHEREFORE, finding no reversible error in the judgment appealed from, the
same is AFFIRMED. Costs against petitioner.
SO ORDERED.

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

UCPB GENERAL INSURANCE CO., INC., petitioner, vs. MASAGANA

TELAMART, INC., respondent.
Insurance; Premiums; An insurance policy, other than life, issued originally or on
renewal, is not valid and binding until actual payment of the premium, and 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.—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 later date after the occurrence of the risk (fire) insured against. 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. 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.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Abello, Concepcion, Regala & Cruz for petitioner.
Arturo S. Santos for respondent.

PARDO, J.:

The case is an appeal via certiorari seeking to set aside the decision of the Court of
Appeals, affirming with modification
1

_______________

*FIRST DIVISION.
1In CA-G.R. CV No. 42321, promulgated on September 7, 1998. Aliño-Hormachuelos, J., ponente,
Guerrero and Villarama, Jr., JJ., concurring.
260
260 SUPREME COURT
REPORTS
ANNOTATED
UCPB General Insurance
Co., Inc. vs. Masagana
Telamart, Inc.
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.
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.
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.
261
VOL. 308, JUNE 15, 261
1999
UCPB General Insurance
Co., Inc. vs. Masagana
Telamart, Inc.
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:
“WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff
and against the defendant, as follows:
 1. “(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 replacementrenewal policies for Exhibits A, B, C, D and E;
2. “(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. “(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. “(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.

_______________

2RTC Original Record, pp. 1-10.

3RTC Original Record, pp. 103-117.
262
262 SUPREME COURT
REPORTS
ANNOTATED
UCPB General Insurance
Co., Inc. vs. Masagana
Telamart, Inc.
“All other claims and counterclaims asserted by the parties are denied and/or dismissed,
including plaintiff’s 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 affirming 6

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 practice, 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. On April8

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

_______________

4 RTC Original Record, pp. 454-466.

5 Docketed as CA-G.R. CV No. 42321.
6 Aliño-Hormachuelos, J., ponente, Guerrero and Villarama, Jr., JJ., concurring.

7 Petition, Annex “A,” Rollo, pp. 38-54.

8 Rollo, p. 72.

9 Rollo, pp. 73-106.

263
VOL. 308, JUNE 15, 263
1999
UCPB General Insurance
Co., Inc. vs. Masagana
Telamart, Inc.
sixty (60) to ninety (90) day credit agreement between UCPB and Masagana, 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 later date after the occurrence of the
risk (fire) insured against.
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. The parties may 11

not agree expressly or impliedly on the extension of credit or time to pay the premium
and consider the policy binding before actual payment.
The case of Malayan Insurance Co., Inc. vs. Cruz-Arnaldo, cited by the Court of
12

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

_______________

10 Comment, Rollo, on p. 84.

 11 Section 77, Insurance Code of the Philippines; Valenzuela vs. Court of Appeals, 191 SCRA 1; South
Sea Surety and Insurance Co., Inc. vs. Court of Appeals, 244 SCRA 744; Tibay vs. Court of Appeals, 275
SCRA 126.
12 154 SCRA 672.

264
264 SUPREME COURT
REPORTS
ANNOTATED
People vs. Sanchez
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.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Melo, Kapunan and Ynares-Santiago,
JJ., concur.
Judgment reversed and set aside.
Notes.—Payment of the premium is a condition precedent to, and essential for,
the efficaciousness of the contract of insurance. (South Sea Surety and Insurance
Company, Inc. vs. Court of Appeals, 244 SCRA 744 [1995])
Under Sections 77 and 78 of the Insurance Code, until the premium is paid, and
the law has not expressly excepted partial payments, there is no valid and binding
contract. (Tibay vs. Court of Appeals, 257 SCRA 126 [1996])