Facts:

• Masagana Telemart, Inc. obtained five insurance policies from UCPB General Insurance Co., Inc. covering properties in Pasay City and Manila.
• The policies were effective from 4:00 PM on May 22, 1991, to 4:00 PM on May 22, 1992.
• A fire destroyed the insured properties on June 13, 1992.
• On July 13, 1992, Masagana tendered five Equitable Bank Manager's Checks totaling P225,753.45 as renewal premium payments.
• UCPB initially accepted these payments but later returned them, citing policy expiration and prior notice of non-renewal.
• Masagana filed a case to claim indemnity for the burned properties.
• The trial court allowed Masagana to consign the premium payment, declared the policies effective from May 22, 1992, to May 22, 1993, and ordered UCPB to pay P18,645,000.00 as indemnity.
• The Court of Appeals affirmed the decision with modifications, deleting the declaration that three policies were in force from August 1991 to August 1992 and reducing attorney's fees from 25% to 10% of the total amount due.
• UCPB appealed, arguing that the tender of payment after the fire did not renew the policies.
• The Supreme Court initially reversed the Court of Appeals' decision but later reconsidered upon Masagana's motion, highlighting the long-standing practice of granting a 60 to 90-day credit term for premium payments and the absence of a valid notice of non-renewal.

Issue:

• (Unlock)

Ruling:

1. Yes, the fire insurance policies were renewed by an implied credit arrangement.
2. No, Section 77 of the Insurance Code does not strictly prohibit the renewal of policies without prepayme...(Unlock)

Ratio:

• The Supreme Court ruled in favor of Masagana Telemart, Inc., finding that the insurance policies were renewed by operation of law and were valid at the time of the fire.
• The Court noted that UCPB had a long-standing practice of granting a 60 to 90-day credit term for premium payments, which Masagana relied upon in good faith.
• UCPB failed to provide a valid notice of n...continue reading