Insurance Digests Part 2 Dinglasan

3. Rizal Surety v CA G.R. No. 112360. July 18, 2000

Evidence; Appeals; The Supreme Court is mindful of the well-entrenched doctrine that factual findings by
the Court of Appeals are conclusive on the parties and not reviewable by the Supreme Court.The Court
is mindful of the well-entrenched doctrine that factual findings by the Court of Appeals are conclusive on
the parties and not reviewable by this Court, and the same carry even more weight when the Court of
Appeals has affirmed the findings of fact arrived at by the lower court.

Contracts; Insurance Law; Interpretation of Contracts; Terms in an insurance policy, which are
ambiguous, equivocal or uncertain are to be construed strictly and most strongly against the insurer.
Indeed, the stipulation as to the coverage of the fire insurance policy under controversy has created a
doubt regarding the portions of the building insured thereby. Article 1377 of the New Civil Code provides:
Art. 1377. The interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity. Conformably, it stands to reason that the doubt should be resolved against the
petitioner, Rizal Surety Insurance Company, whose lawyer or managers drafted the fire insurance policy
contract under scrutiny. Citing the aforecited provision of law in point, the Court in Landicho vs.
Government Service Insurance System, ruled: This is particularly true as regards insurance policies, in
respect of which it is settled that the terms in an insurance policy, which are ambiguous, equivocal, or
uncertain x x x are to be construed strictly and most strongly against the insurer, and liberally in favor of
the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially
where forfeiture is involved (29 Am. Jur., 181), and the reason for this is that the insured usually has no
voice in the selection or arrangement of the words employed and that the language of the contract is
selected with great care and deliberation by experts and legal advisers employed by, and acting
exclusively in the interest of, the insurance company. (44 C.J.S., p. 1174).

Judgments; Res Judicata; The rule on conclusiveness of judgment, which obtains under the premises,
precludes the relitigation of a particular fact or issue in another action between the same parties based
on a different claim or cause of action.The rule on conclusiveness of judgment, which obtains under the
premises, precludes the relitigation of a particular fact or issue in another action between the same
parties based on a different claim or cause of action, x x x the judgment in the prior action operates as
estoppel only as to those matters in issue or points controverted, upon the determination of which the
finding or judgment was rendered. In fine, the previous judgment is conclusive in the second case, only as
those matters actually and directly controverted and determined and not as to matters merely involved
therein.

Same; Same; Where a partys insurable interest in, and compensability for the loss of certain articles had
been adjudicated, settled and sustained by the Court of Appeals and by the Supreme Court, the same can
no longer be relitigated and passed upon in another case.The controversy at bar is on all fours with the
aforecited case. Considering that private respondents insurable interest in, and compensability for the
loss of subject fun and amusement machines and spare parts, had been adjudicated, settled and
sustained by the Court of Appeals in CA-G.R CV NO 28779, and by this Court in G.R. No. L-111118, in a
Resolution, dated February 2, 1994, the same can no longer be relitigated and passed upon in the
present case. Ineluctably, the petitioner, Rizal Surety Insurance Company is bound by the ruling of the
Court of Appeals and of this Court that the private respondent has an insurable interest in the aforesaid
fun and amusement machines and spare parts; and should be indemnified for the loss of the same.

J. Purisima

Facts:

Rizal Surety issued a 1 million peso fire insurance policy with Transworld. This was increased to 1.5
million. A four span building was part of the policy. A fire broke out and gutted the building, together
with a two storey building behind it were gaming machines were stored. The company filed its claims
but to no avail. Hence, it brought a suit in court. It aimed to make Rizal pay for almost 3 million including
legal interest and damages. Rizal claimed that the policy only covered damage on the four span building
and not the two storey building. The trial court ruled in Transworlds favor and ordered Rizal to pay
actual damages only. The court of appeals increased the damages. The insurance company filed a MFR.
The CA answered by modifying the imposition of interest. Not satisfied, the insurance company
petitioned to the Supreme Court.

Issue:

WON Rizal Surety is liable for loss of the two-storey building considering that the fire insurance policy
sued upon covered only the contents of the four-span building.

Held: Yes. Petition dismissed.

Ratio:

The policy had clauses on the building coverage that read:

"contained and/or stored during the currency of this Policy in the premises occupied by them forming
part of the buildings situated within own Compound"

"First, said properties must be contained and/or stored in the areas occupied by Transworld and second,
said areas must form part of the building described in the policy xxx"

This generally means that the policy didnt limit its coverage to what was stored in the four-span
building.
As to questions of fact, both the trial court and the Court of Appeals found that the so called "annex "
was not an annex building but an integral part of the four-span building described in the policy and
consequently, the machines and spare parts stored were covered by the fire insurance.

A report said: "Two-storey building constructed of partly timber and partly concrete hollow blocks under
g.i. roof which is adjoining and intercommunicating with the repair of the first right span of
the lofty storey building and thence by property fence wall."

"Art.1377. The interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity"

Landicho v GSIS- the 'terms in an insurance policy, which are ambiguous, equivocal, or uncertain are to
be construed strictly and most strongly against the insurer, and liberally in favor of the insured so as to
effect the dominant purpose of indemnityor payment to the insured

The issue of whether or not Transworld has an insurable interest in the fun and amusement machines
and spare parts, which entitles it to be indemnified for the loss thereof, had been settled in another SC
case.

7. Gaunt vs John hancock

Brief Fact Summary. Plaintiff was the beneficiary of an insurance policy issued by John Hancock Mutual
Insurance Co. (Defendant). The policy was such that Plaintiff received payments from the time the policy
was issued for the next twenty years, with a final payment of $5000.00. Defendant stopped payments
and paid the $5000.00 after fifteen years, because, Defendant claimed, that there was a mistake and
both insured and Defendant intended the policy to be for fifteen years.

Synopsis of Rule of Law. The doctrine of anticipatory breach does not apply to a unilateral contract by
an insurance company to pay a specified amount of money at a specified time

Facts.

John Hancock Mutual Life Insurance Co. (Insurance Company) (defendant) provided life insurance for
the deceased. The deceaseds policy named Cohen (plaintiff) as a beneficiary. Under the terms of the
insurance policy, Cohen was to be paid monthly installments for 20 years following the date that the
policy was issued (1939), with a final lump sum payment of $5,000 at the end of 20 years. The deceased
died in February 1945. The Insurance Company made monthly installment payments to Cohen for 15
years, and at the end of that time, delivered the final lump sum payment of $5,000 to Cohen. The
Insurance Company refused to make any additional payments to Cohen. As ground for refusal, the
Insurance Company argued that the policy was issued for 20 years by mistake and that both parties
intended protection for Cohen for only 15 years. Cohen brought suit against the Insurance Company in
federal district court seeking to recover the remaining balance due on the policy. The trial court held
that the policy was not issued for 20 years by mistake, and required the Insurance Company to
immediately pay Cohen the remaining amount that would be due on the policy in the future if the policy
was carried out as agreed, plus the $5,000 lump sum. Total damages awarded to Cohen were $8,000.
The Insurance Company appealed. On appeal, the appellate court affirmed the trial courts finding that
no mistake occurred in issuing the policy for 20 years. The appellate court then considered whether the
Insurance Company anticipatorily breached

Issue. May Plaintiff sue Defendant for anticipatory repudiation?

Held. Yes.
Defendant cites Corbin on Contracts, stating that Plaintiff has not fulfilled all the conditions of the
contract.
However, Corbin on Contracts does not apply because the contract in question is not an annuity or
disability policy that would pay instalments for an indefinite time, nor is it an agreement to pay money
in the future if an event occurs. Rather, it is a unilateral contract to pay a specific amount of money at a
specific time.

Discussion. The court said that rather than trying to categorize contracts by those parties that enter into
them, one should look at the actual agreement.

11.

G.R. No. 3069 January 23, 1907

VIOLA BADGER, plaintiff-appellant,

vs.
THE NEW YORK LIFE INSURANCE COMPANY, defendant-appellee.

LIFE INSURANCE COMPANIES; CONTRACT; AGENCY.A life insurance company incurs no liability in a
case' (1) where it is not shown that the only person who acted in its behalf had authority to make a
contract binding upon it, (2) where no contract was in fact made by such person to the effect that the
company should be bound, and (3) where the evidence shows affirmatively that the company would not
be bound until the application had been acted upon either by its Shanghai or New York office.

ID.; ID.; APPLICATIONS FOR INSURANCE.The mere signing of an application for life insurance and the
payment of the first premium do not bind the company to issue a policy where there is no evidence of
any contract between the appellant and the company that such acts should constitute a contract for
insurance Badger vs. New York Life Insurance Co., 7 Phil., 381, No. 3069 January 23, 1907

FACTS

On July 5, 1902, William H. Badger made out a written application for a policy of insurance upon his life
for $5,000 in favor of his wife, Harriet Viola Badger. The first premium on this policy amounted to
$312.50. Badger sent the application and $297.60 to R. E. Herdman, who received the application and
the money on the 9th of July, 1902.

Herdman sent the papers on July 24 to the office of the defendant company in Shanghai, where they
were received on August 11. Badger executed a promissory note for $14.90, the balance of the first
premium, which was sent to Herdman on July 17, 1902. On the 31st of July, Mrs. Badger, acting for her
husband, sent to Herdman $14.90, cash, in payment of said note. Badger died on the 1st day of August,
1902, of cholera. No policy was ever issued upon his application.
The plaintiff brought this action to recover the sum of $5,000, alleging that a contract of insurance had
been made by the company with Badger. Judgment was rendered in the court below in favor of the
defendant to the effect that no such contract was ever made, from which judgment the plaintiff
appealed.

ISSUE:

Whether or not a contract of insurance was made before the insured expired.

HELD: No.

This evidence shows conclusively that there was no parol agreement between the parties that the
insurance had commenced on July 5, 1902. In fact, the claim of the appellant reduced to its lowest terms
is that the mere signing of an application for life insurance and the payment of a first premium, without
any parol agreement as to when the insurance shall commence, constitutes a contract between the
parties binding from that date. Such a contention as this can not be sustained.

Moreover, there is evidence in the case in addition to that already referred to, showing that the
company expressly refused to be bound until the application had been accepted either by its office in
Shanghai or its office in New York. In the application which Badger signed on the 5th day of July it is said:

I agree, on behalf of myself and of any person who shall have or claim any interest in any policy issued
under this application, as follows: That inasmuch as only the officers at the home office of the company
in the city of New York have authority to determine whether or nor a policy shall issue on any
application, no statements, etc., shall be binding on the company.

It seems very clear that no liability was incurred by the company in this case. The judgment of the court
below is accordingly affirmed, with the costs of this instance against the appellant.

15. Capital vs Plastic

Capital Insurance & Surety Co. Inc. V. Plastic Era Co. Inc (1975)

G.R.No. L-22375 July 18, 1975

Lessons Applicable: Estoppel and credit extension (Insurance)

Laws Applicable: Article 1249 of the New Civil Code

Insurance; Premiums; Waiver of requirement for payment of initial premium in advance or actual cash by
acceptance of promissory note.The insurer accepted the promise of the insured to pay the insurance
premium within thirty (30) days from the effective date of the policy. By so doing, it has implicitly agreed
to modify the tenor of the insurance policy and in effect, waived the provision therein that it would only
pay for the loss or damage in case the same occurs after the payment of the premium. Considering that
the insurance policy is silent as to the mode of payment, the insurer is deemed to have accepted the
promissory note in payment of the premium. This rendered the policy immediately operative on the date
it was delivered.
Same; Same; Dishonor of check in payment of promissory note does not result in forfeiture of rights of
insured in the absence of stipulation to the effect.The fact that the check issued by the insured was
later on dishonored did not in any way operate as a forfeiture of its rights under the policy, there being
no express stipulation therein to that effect. In the absence of express agreement or stipulation to that
effect in the policy, the non-payment at maturity of a note given for and accepted as premium on a
policy does not operate to forfeit the rights of the insured even though the note is given for an initial
premium, nor does the fact that the collection of the note had been enjoined by the insured in any way
affect the policy.

Same; Same; Where insurer gives insured credit for payment of premium, insurer without right to cancel
policy except by putting insured in default and giving him personal notice.The insurer could just deduct
the premium due and unpaid upon the satisfaction of the loss under the policy. It did not have the right
to cancel the policy for non-payment of the premium except by putting the insured in default and giving
him personal notice to that effect. Where credit is given by an insurance company for the payment of the
premium it has no right to cancel the policy for non-payment except by putting the insured in default and
giving him personal notice.

Same; Same; Insurer estopped from claiming forfeiture of insurance policy if check held for a long time
dishonored.Having held the check for such an unreasonable period of time, the insurer was estopped
from claiming a forfeiture of its policy for non-payment even if the check had been dishonored later.
Where the check is held for an unreasonable time before presenting it for payment, the insurer may be
held estopped from claiming a forfeiture if the check is dishonored. Capital Insurance & Surety Co., Inc.
vs. Plastic Era Co., Inc. , 65 SCRA 134, No. L-22375 July 18, 1975

FACTS:

December 17, 1960: Capital Insurance & Surety Co., Inc. delivered to the respondent Plastic Era
Manufacturing Co., Inc. its open Fire Policy insuring its building, equipments, raw materials,
products and accessories located at Sheridan Street, Mandaluyong, Rizal between December 15,
1960 1 pm - December 15, 1961 1 pm up to P100,000 but Plastic Era did not pay the premium

January 8, 1961: Plastic Era delivered to Capital Insurance its partial payment through
check P1,000 postdated January 16, 1961

February 20, 1961: Capital Insurance tried to deposit the check but it was dishonored due to lack
of funds. According to the records, on January 19, 1961 Plastic Era has had a bank balance
of P1,193.41

January 18, 1961: Plastic Era's properties were destroyed by fire amounting to a loss
of P283,875. The property was also insured to Philamgen Insurance Company for P200K.

Capital Insurance refused Plastic Era's claim for failing to pay the insurance premium

CFI: favored Capital Insurance

 CA: affirmed

ISSUE: W/N there was a valid insurance contract because there was an extention of credit despite failing
to encash the check payment

HELD: YES. Affirmed

Article 1249 of the New Civil Code

The delivery of promissory notes payable to order, or bills of exchange or other

mercantile documents shall produce the effect of payment only when they have been
cashed, or when through the fault of the creditor they have been impaired

Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within 30
days from the effective date of policy. Considering that the insurance policy is silent as to the
mode of payment, Capital Insurance is deemed to have accepted the promissory note in
payment of the premium. This rendered the policy immediately operative on the date it was
delivered.

By accepting its promise to pay the insurance premium within thirty (30) days from the
effectivity date of the policy December 17, 1960 Capital Insurance had in effect extended
credit to Plastic Era.

Where credit is given by an insurance company for the payment of the premium it has no right
to cancel the policy for nonpayment except by putting the insured in default and giving him
personal notice

Having held the check for such an unreasonable period of time, Capital Insurance was estopped
from claiming a forfeiture of its policy for non-payment even if the check had been dishonored
later.

19. Makati Tuscany Condominium Corp. vs. Court of Appeals

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 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 (3) years, the
insurer accepted all the installment payments. Such acceptance of payments speaks loudly of the
insurers 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.

Facts:

Sometime in early 1982, private respondent American Home Assurance Co. (AHAC), represented by
American International Underwriters (Phils.), Inc., issued in favor of petitioner Makati Tuscany
Condominium Corporation (TUSCANY) Insurance Policy on the latter's building and premises, for a
period beginning March 1982 and ending March 1983, with a total premium of P466,103.05. The
premium was paid on installments, all of which were accepted by private respondent.

In February 1983, private respondent issued to petitioner another Insurance Policy, 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. All payments were likewise accepted by private
respondent.

In January 1984, the policy was again renewed and private respondent issued to petitioner Insurance
Policy for the period March 1984 to March 1985. On this renewed policy, petitioner made two
installment payments, both accepted by private respondent. Thereafter, petitioner refused to pay the
balance of the premium.

Consequently, AHAC filed an action to recover the unpaid balance of P314,103.05 for Insurance policy.
In its answer with counterclaim, Tuscany admitted the issuance of Insurance Policy. 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 well as the two (2)
previous policies, stated the following reservations: (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 (3) Subject to no loss prior to premium
payment. If there be any loss such is not covered. Tuscany 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.

Issue:
Whether payment by installment of the premiums due on an insurance policy invalidates the contract of
insurance.

Ruling:

No. The subject policies are valid even if the premiums were paid on installments. The records clearly
show that Tuscany and AHAC 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 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 Tuscany. 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. Thus, while the import of Section 77 is
that prepayment of premiums is strictly required as a condition to the validity of the contract, the Court
was 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
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. 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. It appearing from the peculiar circumstances that the parties actually intended to
make the three (3) insurance contracts valid, effective and binding, Tuscany 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 (AH-CPP-9210651) in March 1985. Moreover, 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.

23. UCPB Vs Masagana

UCPB General Insurance vs. Masagana Telamart Inc. ,

[GR 137172]

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 voidthe 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.

Facts:

On 15 April 1991, UCPB General Insurance Co. Inc. (UCPBGen) issued 5 insurance policies covering
Masagana Telamart, Inc.'s various property described therein against fire, for the period from 22 May
1991 to 22 May 1992. In March 1992, UCPBGen evaluated the policies and decided not to renew them
upon expiration of their terms on 22 May 1992. UCPBGen advised Masagana's broker, Zuellig Insurance
Brokers, Inc. of its intention not to renew the policies. On 6 April 1992, UCPBGen gave written notice to
Masagana of the non-renewal of the policies at the address stated in the policies. On 13 June 1992, fire
razed Masagana's property covered by three of the insurance policies UCPBGen issued. On 13 July 1992,
Masagana presented to UCPBGen's cashier at its head office 5 manager's checks in the total amount of
P225,753.95, representing premium for the renewal of the policies from 22 May 1992 to 22 May 1993.
No notice of loss was filed by Masagana under the policies prior to 14 July 1992. On 14 July 1992,
Masagana filed with UCPBGen its formal claim for indemnification of the insured property razed by fire.
On the same day, 14 July 1992, UCPBGen returned to Masagana the 5 manager's checks that it
tendered, and at the same time rejected Masagana's claim for the reasons (a) that the policies had
expired and were not renewed, and (b) that the fire occurred on 13 June 1992, before Masagana's
tender of premium payment. On 21 July 1992, Masagana filed with the Regional Trial Court, Branch 58,
Makati City, a civil complaint against UCPBGen for recovery of P18,645,000.00, representing the face
value of the policies covering Masagana's insured property razed by fire, and for attorney's fees. On 23
October 1992, after its motion to dismiss had been denied, UCPBGen filed an answer to the complaint. It
alleged that the complaint "fails to state a cause of action"; that UCPBGen was not liable to Masagana
for insurance proceeds under the policies because at the time of the loss of Masagana's property due to
fire, the policies had long expired and were not renewed. After due trial, on 10 March 1993, the
Regional Trial Court, Branch 58, Makati, rendered decision, (1) authorizing and allowing Masagana to
consign/deposit with this Court the sum of P225,753.95 (refused by UCPBGen) as full payment of the
corresponding premiums for the replacement-renewal policies; (2) declaring Masagana to have fully
complied with its obligation to pay the premium thereby rendering the replacement-renewal policy
effective and binding for the duration 22 May 1992 until 22 May 1993; and, ordering UCPBGen to deliver
forthwith to Masagana the said replacement-renewal policies; (3) declaring two of the policies in force
from 22 August 1991 up to 23 August 1992 and 9 August 1991 to 9 August 1992, respectively; and (4)
ordering UCPBGen to pay Masagana the sums of: (a) P18,645,000.00 representing the latter's claim for
indemnity under three policies 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. In
due time, UCPBGen appealed to the Court of Appeals. On 7 September 1998, the Court of Appeals
promulgated its decision affirming that of the Regional Trial Court with the modification that item 3 of
the dispositive portion was deleted, and the award of attorney's fees was reduced to 10% of the total
amount due. The Court of Appeals held that following previous practise, Masagana was allowed a 60 to
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. UCPBGen appealed.

Issue:

Whether the fire insurance policies issued by UCPBGen to the Masagana covering the period 22 May
1991 to 22 May 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.

Held:

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. The case of Malayan
Insurance Co., Inc. vs. Cruz-Arnaldo is not applicable. In that case, payment of the premium was in fact
actually made on 24 December 1981, and the fire occurred on 18 January 1982. Here, the payment of
the premium for renewal of the policies was tendered on 13 July 1992, a month after the fire occurred
on 13 June 1992. The assured did not even give the insurer a notice of loss within a reasonable time
after occurrence of the fire. Hence, the Supreme Court reversed and set aside the decision of the Court
of Appeals in CA-GR CV 42321. In lieu thereof, the Court rendered judgment dismissing Masagana's
complaint and UCPBGen's counterclaims thereto filed with the Regional Trial Court, Branch 58, Makati
City, in Civil Case 92-2023, without costs.