G.R. No. 119655 - Spouses Tibay vs. Court of Appeals

On January 22, 1987, Fortune Life and General Insurance Co., Inc. issued Fire Insurance Policy No. 136171 covering a two-storey residential building and contents of Violeta R. Tibay and/or Nicolas M. Roraldo at 5855 Zobel Street, Makati City, for ₱600,000.00, effective January 23, 1987 to January 23, 1988.
The total premium was set at ₱2,983.50, but on January 23, 1987, only ₱600.00 was paid, leaving a balance of ₱2,383.50.

On March 8, 1987, the insured building was completely destroyed by fire.
On March 10, 1987, Violeta Tibay paid the remaining premium and filed a claim with Fortune, which referred adjustment to Goodwill Adjustment Services, Inc.
On March 28, 1987, Tibay signed a “non-waiver agreement” with the adjuster, preserving Fortune’s right to invoke all policy conditions and defenses.

By letter dated June 11, 1987, Fortune denied the claim, citing violation of Policy Condition No. 2 (prepayment) and Section 77 of the Insurance Code. Attempts at settlement before the Insurance Commission failed.
On March 3, 1988, petitioners sued Fortune for ₱600,000.00 indemnity, 12% annual interest, ₱100,000.00 moral damages, and 20% attorney’s fees.
On July 19, 1990, the trial court ruled in favor of petitioners, awarding the full policy amount plus legal interest, attorney’s fees, and costs.
On March 24, 1995, the Court of Appeals reversed, holding the policy never became binding due to non-prepayment of premium, and ordering refund of the entire premium (₱2,983.50) plus 12% interest from March 10, 1987.

Whether a fire insurance policy that stipulates full prepayment as a condition precedent becomes valid and enforceable upon mere partial payment followed by payment of the balance only after the loss.
Whether Fortune’s acceptance of partial premium or referral of the claim to its adjuster impliedly waived the full-payment condition or estopped it from relying on such condition.