Professional Documents
Culture Documents
356 Scra 307
356 Scra 307
*
G.R. No. 137172. April 4, 2001.
______________
* EN BANC.
308
309
310
311
RESOLUTION
_______________
1 Rollo, 38.
312
“a) Said policies expired last May 22, 1992 and were not
renewed for another term;
b) Defendant had put plaintiff and its alleged broker on
notice of non-renewal earlier; and
c) The properties covered by the said policies were burned in
a fire that took place last June 13, 1992, or before tender
of premium payment.”
(Record, p. 5)
313
under O.R. No. 46487 (Exhs. “V” and “V-1”). And so were as other
policies: Fire Insurance Policy No. 34657 covering risks from May
22, 1990 to May 22, 1991 was issued on May 7, 1990 but premium
therefor was paid only on July 19, 1990 under O.R. No. 46583
(Exhs. “W” and “W-1”). Fire Insurance Policy No. 34661 covering
risks from May 22, 1990 to May 22, 1991 was issued on May 3,
1990 but premium was paid only on July 19, 1990 under O.R. No.
46582 (Exhs. “X” and “X-1”). Fire Insurance Policy No. 34688 for
insurance coverage from May 22, 1990 to May 22, 1991 was
issued on May 7, 1990 but premium was paid only on July 19,
1990 under O.R. No. 46585 (Exhs. “Y” and “Y-1”). Fire Insurance
Policy No. 29126 to cover insurance risks from May 22, 1989 to
May 22, 1990 was issued on May 22, 1989 but premium therefor
was collected only on July 25, 1990[sic] under O.R. No. 40799
(Exhs. “AA” and “AA-1”). Fire Insurance Policy No. HO/F-26408
covering risks from January 12, 1989 to January 12, 1990 was
issued to Intratrade Phils. (Masagana’s sister company) dated
December 10, 1988 but premium therefor was paid only on
February 15, 1989 under O.R. No. 38075 (Exhs. “BB” and “BB-1”).
Fire Insurance Policy No. 29128 was issued on May 22, 1989 but
premium was paid only on July 25, 1989 under O.R. No. 40800 for
insurance coverage from May 22, 1989 to May 22, 1990 (Exhs.
“CC and “CC-1”). Fire Insurance Policy No. 29127 was issued on
May 22, 1989 but premium was paid only on July 17, 1989 under
O.R. No. 40682 for insurance risk coverage from May 22, 1989 to
May 22, 1990 (Exhs. “DD” and “DD-1”). Fire Insurance Policy No.
HO/F-29362 was issued on June 15, 1989 but premium was paid
only on February 13, 1990 under O.R. No. 39233 for insurance
coverage from May 22, 1989 to May 22, 1990 (Exhs. “EE” and
“EE-1”). Fire Insurance Policy No. 26303 was issued on November
22, 1988 but premium therefor was collected only on March 15,
1989 under O.R. No. 38573 for insurance risks coverage from
December 15, 1988 to December 15, 1989 (Exhs. “FF” and “FF-1).
official receipt for, the premium payment on July 1[3], 1992 which
indicates defendant’s willingness to assume the risk despite only
a 67.5% reinsurance cover[age]; and (3) Defendant insurer
appointed Esteban Adjusters and Valuers to investigate plaintiffs
claim as shown by the letter dated July 17, 1992 (Exhibit 11,”
Record, p. 254).
_______________
315
316
We hold that the subject policies are valid even if the premiums
were paid on installments. The records clearly show that the
petitioners and private respondent 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
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.
Not only that. In Tuscany, we also quoted with approval
the following pronouncement of the Court of Appeals in its
Resolution denying the motion for reconsideration of its
decision:
_______________
318
SEPARATE OPINION
VITUG, J.:
An essential characteristic of an insurance is its being
synallagmatic, a highly reciprocal contract where the rights
and obligations of the parties correlate and mutually
correspond. The insurer assumes the risk of loss which an
insured might suffer in consideration of premium payments
under a risk-distributing device. Such assumption of risk is
a component of a general scheme to distribute actual losses
among a group of persons, bearing similar risks, who make
ratable contributions to a fund from which the losses
incurred due to exposures to the peril insured against are
assured and compensated.
It is generally recognized that the1 business of insurance
is one imbued with public interest. For the general good
and mutual
______________
1 Hartford Acci. & Indem. Co. vs. N.O. Leson Mfg. Co., 291 US 352, 78
L Ed, 840, 54 S Ct. 392.
320
_______________
321
“Under the former rule, whenever the insured was granted credit
extension of the premium due or given a period of time to pay the
premium on the policy issued, such policy was binding although
premiums had not been paid (Section 72, Insurance Act; 6 Couch
2d. 67). This rule was changed when the present provision
eliminated the portion concerning credit agreement, and added
the phrase ‘notwithstanding any agreement to the contrary’ which
precludes the parties from stipulating that the policy is valid even
if premiums are not paid. Hence, under the present law, the policy
is not valid and binding unless and until the premium is paid
(Arce vs. Capital Insurance & Surety Co., Inc., 117 SCRA 63). If
the insurer wants to favor the insured by making the policy
binding notwithstanding the non-payment of premium, a mere
credit agreement would not be sufficient. The remedy would be for
the insurer to acknowledge in the policy that premiums were paid
although they were not, in which case the policy becomes binding
because such acknowledgment is a conclusive evidence of
payment of premium (Section 78). Thus, the Supreme Court took
note that under the present law, Section 77 of the Insurance Code
of 1978 has deleted the clause ‘unless there is a clear agreement
to grant the insured credit extension
6
of the premium due’ (Velasco
vs. Apostol, 173 SCRA 228).”
________________
322
_______________
7 Ames. vs. Auto Owners’ Ins. Co.; 195 N.W. 686, 225 Mich. 44; 45
C.J.S. 674.
8 C.E. Carnes & Co. vs. Employers’ Liability Assur. Corp., Limited of
London, England, C.C.A. La, 101 F2d 739; 45 CJS 674.
9 Development Bank of the Philippines vs. Court of Appeals, 284 SCRA
14 (1998).
10 See Constantino vs. Asia Life Insurance Co., 87 Phil. 248.
11 See Philippine Phoenix Surety and Insurance, Inc. vs. Woodworks,
Inc., 20 SCRA 1271 (1967).
12 See Makati Tuscany Condominium vs. Court of Appeals, 215 SCRA
463 (1992).
323
DISSENTING OPINION
PARDO, J.:
_______________
324
________________
325
________________
326
_______________
327
________________
328
328 SUPREME COURT REPORTS ANNOTATED
UCPB General Insurance Co., Inc. vs. Masagana Telamart,
Inc.
_______________
10
The case of Tibay v. Court of Appeals is in point. The issue
raised therein was: “May a fire insurance policy be valid,
binding and enforceable upon mere partial payment of
premium?” In the said case, Fortune Life and General
Insurance Co., Inc. issued Fire Insurance Policy No. 136171
in favor of Violeta R. Tibay and/or Nicolas Roraldo, on a
two-storey residential building located at 5855 Zobel
Street, Makati City, together with all the personal effects
therein. The insurance was for P600,000.00, covering the
period from 23 January 1987 to 23 January 1988. On 23
January 1987, of the total premium of P2,983.50, Violeta
Tibay only paid P600.00, thus leaving a substantial balance
unpaid. On March 8, 1987, the insured building was
completely destroyed by fire. Two days later, or on 10
March 1987, Violeta Tibay paid the balance of the
premium. On the same day, she filed with Fortune a claim
for the proceeds of the fire insurance policy.
In denying the claim of insurance, the Court ruled that
“by express agreement of the parties, no vinculum juris or
bond of law was to be established until full payment was 11
effected prior to the occurrence of the risk insured against.
As expressly stipulated in the contract, full payment must
be made before the risk occurs for the policy to be
considered effective and in force. “No vinculum juris
whereby the insurer bound itself to indemnify the assured
according to law
12
ever resulted from the fractional payment
of premium.”
The majority cited the case of Makati 13
Tuscany
Condominium Corp. vs. Court of Appeals to support the
contention that the insurance policies subject of the instant
case were valid and effective. However, the factual
situation in that case was different from the case at bar.
In Tuscany, the Court held that the insurance policies
were valid and binding because there was partial payment
of the premiums and a clear understanding between the
parties that they had intended the insurance policies to be
binding and effective notwith-
_______________
330
331
——o0o——
_______________
332
© Copyright 2020 Central Book Supply, Inc. All rights reserved.