Prepared by: Ralph Jarvis Alindogan

Title: Sps. Tibay vs. CA

Topic: Art. 1223
The divisibility or indivisibility o the things that are the ob!ect o obligations in "hich there is only one debtor and only one
creditor does not alter or #odiy the provisions o Chapter 2 o this Title$.
Facts:
%n Jan&ary 22' 1()* private respondent +ort&ne ,ie and -eneral .ns&rance iss&ed +ire .ns&rance Policy in avor o
/ioleta R. Tibay and0or 1icolas Roraldo on their t"o2storey residential b&ilding located at 3obel Street' 4a5ati City' together
"ith all their personal eects therein. The ins&rance "as or P677'777.77 covering the period ro# Jan&ary 23'1()* to
Jan&ary 23' 1()).
%n Jan&ary 23'1()*' o the total pre#i&# o P2'()3.87' petitioner /ioleta Tibay only paid P677.77 th&s leaving a
considerable balance &npaid. %n 4arch )'1()* the ins&red b&ilding "as co#pletely destroyed by ire. T"o days later
/ioleta Tibay paid the balance o the pre#i&#. %n the sa#e day' she iled "ith +%RT91: a clai# on the ire ins&rance
policy.
;er clai# "as accordingly reerred to its ad!&ster' -ood"ill Ad!&st#ent Services' .nc. "hich i##ediately "rote /ioleta
re<&esting her to &rnish it "ith the necessary doc&#ents or the investigation and processing o her clai#. Petitioner
orth"ith co#plied. She signed a non2"aiver agree#ent "ith -AS..
.n a letter +%RT91: denied the clai# o /ioleta or violation o Policy Condition 1o. 2 and o Sec. ** o the .ns&rance
Code. :orts to settle the case beore the .ns&rance Co##ission proved &tile. %n 4arch 3'1()) petitioners s&ed
+%RT91: or da#ages in the a#o&nt o P677'777.77 representing the total coverage o the ire ins&rance policy pl&s 12=
interest per ann&#' P177'777.77 #oral da#ages' and attorney>s ees e<&ivalent to 27= o the total clai#.
%n J&ly 1('1((7 the trial co&rt r&led or petitioners and ad!&dged +%RT91: liable or the total val&e o the ins&red b&ilding
and personal properties in the a#o&nt o P677'777.77 pl&s interest at the legal rate o 6= per ann&# ro# the iling o the
co#plaint &ntil &ll pay#ent' and attorney>s ees e<&ivalent to 27= o the total a#o&nt clai#ed pl&s costs o s&it.
%n 4arch 2?' 1((8 the Co&rt o Appeals reversed the r&ling by declaring +%RT91: not to be liable to plainti2appellees
therein b&t ordering +%RT91: to ret&rn to the or#er the pre#i&# o P2'()3.87 pl&s 12= interest ro# 4arch 17'1()* &ntil
&ll pay#ent. This petition or revie" "ith petitioners contending #ainly that contrary to the concl&sion o the appellate co&rt'
+%RT91: re#ains liable &nder the s&b!ect ire ins&rance policy in spite o the ail&re o petitioners to pay their pre#i&# in
&ll.
Issue:
@0% a ire ins&rance policy be valid' binding and enorceable &pon #ere partial pay#ent o pre#i&#A
Held:
1o.
Ratio:
1
An ins&rance is a contract "hereby one &nderta5es or a consideration to inde#niy another against loss' da#age or liability
arising ro# an &n5no"n or contingent event.

The consideration is the pre#i&#' "hich #&st be paid at the ti#e and in the
"ay and #anner speciied in the policy' and i not so paid' the policy "ill lapse and be oreited by its o"n ter#s.
Clearly the Policy provides or pay#ent o pre#i&# in &ll. Accordingly' "here the pre#i&# has only been partially paid and
the balance paid only ater the peril ins&red against has occ&rred' the ins&rance contract did not ta5e eect and the ins&red
cannot collect at all on the policy. This is &lly s&pported by Sec. ** o the .ns&rance Code "hich provides:
Sec. **. An ins&rer is entitled to pay#ent o the pre#i&# as soon as the thing ins&red is eBposed to the peril ins&red
against. 1ot"ithstanding any agree#ent to the contrary' no policy or contract o ins&rance iss&ed by an ins&rance co#pany
is valid and binding &nless and &ntil the pre#i&# thereo has been paid' eBcept in the case o a lie or an ind&strial lie
policy "henever the grace period provision applies Ce#phasis s&ppliedD.
Apparently the cr&B o the controversy lies in the phrase E&nless and &ntil the pre#i&# thereo has been paid.E This leads &s
to the #anner o pay#ent envisioned by the la" to #a5e the ins&rance policy operative and binding. +or "hatever !&dicial
constr&ction #ay be accorded the disp&ted phrase #&st &lti#ately yield to the clear #andate o the la". The principle that
"here the la" does not disting&ish the co&rt sho&ld neither disting&ish ass&#es that the legislat&re #ade no <&aliication
on the &se o a general "ord or eBpression.
.n the t"o C2D cases' PhoeniB and T&scany' ade<&ately de#onstrate the "aiver' either eBpress or i#plied' o prepay#ent in
&ll by the ins&rer: i#pliedly' by s&ing or the balance o the pre#i&# as in PhoeniB' and eBpressly' by agreeing to #a5e
pre#i&#s payable in install#ents as in T&scany. F&t contrary to the stance ta5en by petitioners' there is no "aiver eBpress
or i#plied in the case at bench. Precisely' the ins&rer and the ins&red eBpressly stip&lated that the policy incl&ding any
rene"al thereo and0or any indorse#ent thereon is not in orce &ntil the pre#i&# has been &lly paid to and d&ly receipted
by the Co#pany and that this policy shall be dee#ed eective' valid and binding &pon the Co#pany only "hen the
pre#i&#s thereor have act&ally been paid in &ll and d&ly ac5no"ledged.
Th&s' no vinc&l&# !&ris "hereby the ins&rer bo&nd itsel to inde#niy the ass&red according to la" ever res&lted ro# the
ractional pay#ent o pre#i&#. The ins&rance contract itsel eBpressly provided that the policy "o&ld be eective only "hen
the pre#i&# "as paid in &ll. .t "o&ld have been altogether dierent "ere it not so stip&lated. :rgo' petitioners had absol&te
reedo# o choice "hether or not to be ins&red by +%RT91: &nder the ter#s o its policy and they reely opted to adhere
thereto.
A #aBi# o recogniGed practicality is the r&le that the eBpressed eBception or eBe#ption eBcl&des others. :Bceptio ir#at
reg&li# in casib&s non eBceptis. The eBpress #ention o eBceptions operates to eBcl&de other eBceptionsH conversely' those
"hich are not "ithin the en&#erated eBceptions are dee#ed incl&ded in the general r&le. Th&s' &nder Sec. **' as "ell as
Sec. *)' &ntil the pre#i&# is paid' and the la" has not eBpressly eBcepted partial pay#ents' there is no valid and binding
contract. ;ence' in the absence o clear "aiver o prepay#ent in &ll by the ins&rer' the ins&red cannot collect on the
proceeds o the policy. @e ind no #erit in the petitionH hence' "e air# the Co&rt o Appeals.
@;:R:+%R:' the petition is I:1.:I and the assailed Iecision o the Co&rt o Appeals dated is A++.R4:I.
2