UCPB General Insurance v. Masagana Telemart Inc., G.R. 137172, April 4, 2001


Masagana obtained  five (5) insurance policies covering 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 Brokers, 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 P225,753.95, 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 checks 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 P18,645,000.00, representing the face value of the policies covering respondent’s insured property razed by fire, and for attorney’s fees. 

On October 23, 1992, after its motion to dismiss had been denied, petitioner filed an answer to the complaint. It alleged that the complaint “fails to state a cause of action”; that petitioner was not liable to respondent for insurance proceeds under the policies because at the time of the loss of respondent’s property due to fire, the policies had long expired and were not renewed.


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 latter date after the occurrence of the risk (fire) insured against.


Exceptions to the rule in Section 77 of the Insurance Code of 1978 that there be prepayment of premiums as a condition to the validity of the insurance contract.

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