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Valenzuela vs. CA [G.R. No. 83122.

October 19, 1990] faith and is subjected only to the principal’s liability for
Petitioner: Arturo P. Valenzuela and Hospitalita N. Valenzuela damages. It ordered Valenzuela to pay Philamgen
Respondent: Bienvenido M. Aragon, Robert E. Parnell, Carlos K. P1,932,532.17 representing the unpaid and
Catolico and the Philippine American General Insurance Company , uncollected premiums.

Doctrine: Non-payment of premiums does not merely
suspend but puts an end to an insurance contract since the
time of the payment is peculiarly of the essence of the

1. Arturo Valenzuela is a General Agent of private respondent
Phil. American General Insurance Company Inc. (Philamgen)
since 1965
2. He would solicit & sell in behalf of Philamgen all kinds of
non-life insurance and he would receive full agent’s
commission of 32.5%
3. Valenzuela then solicited marine insurance to Delta Motors
Inc. amounting to P4.4m wherein he would be entitled to
32% commission.
4. The premium payments amounting to P1.946,886 were paid
directly to Philamgen and Valuenza’s commission to which
he is entitled amounting to P632,737
5. Philamgen started to become interested & wanted a share in
the commission that would be due to Valenzuela but the
latter refused.
6. There were certain proposals made by Philamgen and its
President but Valenzuela firmly reiterated his objection.
7. Because of that, Philamgen and its officers reversed his
commission due him, placed agency transactions on a cash
& carry basis thus removing the 60-day credit for premiums
due, threatened to cancel policies issued by Valenzuela’as
agency and even leaked news that he has substantial
accounts w/ Philamgen. All of which resulted in the decline
of his business as insurance agent.
8. Subsequently, Philamgen terminated the General Agency
Agreement of Valenzuela. Hence, Valenzuela sought relief
before the court.
9. RTC: In favor of Valenzuela. The termination was improper
since the principal cause of the termination as General
Agent was due to Valenzuela’s refusal to share his Delta
10.CA: In favor of Philamgen. It held that the power of the
principal to revoke the agency is so pervasive that the
termination may be effected even if the principal acts in bad

Prior to the Amendment. Delgado was decided in the light of the Insurance Act before Sec.. non-payment of premium does not merely sue Valenzuela for the unpaid premiums since there were no suspend but puts an end to an insurance contract since the time of more insurance contracts to speak of due to the lapsing of the payment is peculiarly of the essence of the contract. Woodworks. 72 was HELD: amended by the underscored portion. as amended otherwise known as the Insurance Code of 1974) Philamgen as insurer ceased. v. the remedy for the non-payment loss and correlatively he had also the right to sue for payment of premiums is to put an end to and render the insurance policy not the premium.  “Sec. . Inc. 72 has radically changed binding the legal regime in that unless the premium is paid there is no insurance.  Hence. In Arce v. Under Sec paid so that an insurer was obligated to pay indemnity in case of 77 of the Insurance Code. no policy or contract of insurance is valid and binding unless and until  In this case. But the amendment to Sec. v. Yan lang tlga ung Insurance part. The Capital Insurance and Surety Co. Philamgen could neither demand nor the court held that. Inc. Note: This case was more on Agency. the the premiums thereof have been paid except in the case of a life or policies issued have lapsed. Inc.. premiums and invalid for the purpose of indemnity. An insurer the policies thru the non-payment of premiums by the cannot treat a contract as valid for the purpose of collecting insured. Philamgen had no more liability under the lapsed In Philippine Phoenix Surety and Insurance. the SC held that.612. unless premium is paid. Inc. an insurance contract does not take effect. 77 x x x [N]otwithstanding any agreement to the contrary. And the insurance coverage industrial life policy whenever the grace period provision applies” didn’t go into effect or didn’t continue and the obligation of (P. since the premiums have not been paid.D.ISSUE: W/N Valenzuela is liable to Philamgen for the unpaid and uncollected premiums? NO In the case of Capital Insurance & Surety Co. and inexistent policies. an SC held there was no factual and legal basis for the CA issue such insurance contract was effective even if the premium had not been order regarding the unpaid and uncollected premimus.