UCPB General Insurance Co., Inc. vs.
Masagana Telemart
Inc.
(Insurance Law)
356 SCRA 307 (G.R. No. 137172)
April 4, 2001
Petitioners: UCPB General Insurance Co., Inc.
Respondents Masagana Telemart Inc.
:
CJ. Davide, Jr.:
FACTS:
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
Broker’s, 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
₱225,753.95, 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 check 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.
On July 21, 1992, respondent filed with the Regional Trial Court,
Branch 58, Makati City, a civil complaint against petitioner for
recovery of ₱18,645,000.00 representing the face value of the
policies covering respondent’s insured property razed by fire and
for attorney’s fees.
ISSUE:
Whether Sec. 77 of the Insurance Code of 1978 must strictly be
applied to petitioner’s advantage despite its practice of granting a
60 to 90 day credit term for the payment of the premiums.
HELD:
No. It can be seen at once that Section 77 does not restate the
portion of Section 72 expressly permitting an agreement to
extend the period to pay the premium. But are there exceptions
to Section 77? The answer is in the affirmative. The first exception
is provided by Section 77 itself, and that is, in case of a life or
industrial life policy whenever the grace period provision applies.
The second is that covered by Section 78 of the Insurance Code,
which provides: SEC. 78. Any acknowledgment in a policy or
contract of insurance of the receipt of premium is conclusive
evidence of its payment, so far as to make the policy binding,
notwithstanding any stipulation therein that it shall not be binding
until premium is actually paid. A third exception was laid down in
Makati Tuscany Condominium Corporation vs. Court of Appeals,
wherein we ruled that Section 77 may not apply if the parties
have agreed to the payment in installments of the premium and
partial payment has been made at the time of loss, x x x 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: x x x By the
approval of the aforequoted findings and conclusion of the Court
of Appeals, Tuscany has provided a fourth exception to Section
77, namely, that the insurer may grant credit extension for the
payment of the premium. This simply means that if the insurer
has granted the insured a credit term for the payment of the
premium and loss occurs before the expiration of the term,
recovery on the policy should be allowed even though the
premium is paid after the loss but within the credit term.
Moreover, there is nothing in Section 77 which prohibits the
parties in an insurance contract to provide a credit term within
which to pay the premiums. That agreement is not against the
law, morals, good customs, public order or public policy. The
agreement binds the parties.
Finally in the instant case, it would be unjust and inequitable if
recovery on the policy would not be permitted against Petitioner,
which had consistently panted a 60- to 90-day credit term for the
payment of premiums despite its full awareness of Section 77.
Estoppel bars it from taking refuge under said Section, since
Respondent relied in good faith on such practice. Estoppel then is
the fifth exception to Section 77.
