G.R. No. L-25317 August 6, 1979PHILIPPINE PHOENIX SURETY & INSURANCE COMPANY,plaintiff-appellee,vs.WOODWORKS, INC.,defendant-appellant.Zosimo Rivas for appellant.Manuel O. Chan for appellee.MELENCIO-HERRERA,J.:This case was certified to this Tribunal by the Court of Appeals in its Resolution of October 4, 1965 on a pure question of law and "because the issues raised are practically the same as those in CA-G.R. No. 32017-R" between the same parties, which case had been forwarded to us on April 1, 1964. The latter case, "Philippine Phoenix Surety & Insurance Inc. vs. Woodworks, Inc.," docketed in this Court as L-22684, was decided on August 31, 1967 and has been reported in 20 SCRA 1270.Specifically, this action is for recovery of unpaid premium on a fire insurance policy issued by plaintiff, Philippine Phoenix Surety & Insurance Company, in favor of defendant Woodworks, Inc.The following are the established facts:On July 21, 1960, upon defendant's application, plaintiff issued in its favor Fire Insurance Policy No. 9749 for P500,000.00 whereby plaintiff insured defendant's building, machinery and equipment for a term of one year from July 21, 1960 to July 21, 1961 against loss by fire. The premium and other charges including the margin fee surcharge of P590.76 and the documentary stamps in the amount of P156.60 affixed on the Policy, amounted to P10,593.36.It is undisputed that defendant did not pay the premium stipulated in the Policy when it was issued nor at any time thereafter.On April 19, 1961, or before the expiration of the one-year term, plaintiff notified defendant, through its Indorsement No. F-6963/61, of the cancellation of the Policy allegedly upon request of defendant.1The latter has denied having made such a request. In said Indorsement, plaintiff credited defendant with the amount of P3,110.25 for the unexpired period of 94 days, and claimed the balance of P7,483.11 representing ,learned premium from July 21, 1960 to 18th April 1961 or, say 271 days." On July 6, 1961, plaintiff demanded in writing for the payment of said amount.2Defendant, through counsel, disclaimed any liability in its reply- letter of August 15, 1961, contending, in essence, that it need not pay premium "because the Insurer did not stand liable for any indemnity during the period the premiums were not paid."3On January 30, 1962, plaintiff commenced action in the Court of First Instance of Manila, Branch IV (Civil Case No. 49468), to recover the amount of P7,483.11 as "earned premium." Defendant controverted basically on the theory that its failure "to pay the premium after the issuance of the policy put an end to the insurance contract and rendered the policy unenforceable."4On September 13, 1962, judgment was rendered in plaintiff's favor "ordering defendant to pay plaintiff the sum of P7,483.11, with interest thereon at the rate of 6%, per annum from January 30, 1962, until the principal shall have been fully paid, plus the sum of P700.00 as attorney's fees of the plaintiff, and the costs of the suit." From this adverse Decision, defendant appealed to the Court of Appeals which, as heretofore stated, certified the case to us on a question of law.The errors assigned read:1. The lower court erred in sustaining that Fire Insurance Policy, Exhibit A, was a binding contract even if the premium stated in the policy has not been paid.2. That the lower court erred in sustaining that the premium in Insurance Policy, Exhibit B, became an obligation which was demandable even after the period in the Policy has expired.3. The lower court erred in not deciding that a premium not paid is not a debt enforceable by action of the insurer.We find the appeal meritorious.Insurance is "a contract whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event."5The consideration is the "premium". "The premium must be paid at the time and in the way and manner specified in the policy and, if not so paid, the policy will lapse and be forfeited by its own terms."6The provisions on premium in the subject Policy read:THIS POLICY OF INSURANCE WITNESSETH, THAT in consideration of MESSRS. WOODWORKS, INC. hereinafter called the Insured,payingto the PHILIPPINE PHOENIX SURETY AND INSURANCE, INC., hereinafter called the Company, the sum of PESOS NINE THOUSAND EIGHT HUNDRED FORTY SIX ONLY the Premium for the first period hereinafter mentioned. ...xxx xxx xxxTHE COMPANY HEREBY AGREES with the Insured ... that if the Property above described, or any part thereof, shall be destroyed or damaged by Fire or Lightningafter payment of Premium,at any time between 4:00 o'clock in the afternoon of the TWENTY FIRST day of JULY One Thousand Nine Hundred and SIXTY and 4:00 o'clock in the afternoon of the TWENTY FIRST day of JULY One Thousand Nine Hundred and SIXTY ONE. ... (Emphasis supplied)Paragraph "2" of the Policy further contained the following condition:2. No payment in respect of any premium shall be deemed to be payment to the Company unless a printed form of receipt for the same signed by an Official or duly-appointed Agent of the Company shall have been given to the Insured.Paragraph "10" of the Policy also provided:10. This insurance may be terminated at any time at the request of the Insured, in which case the Company will retain the customary short period rate for the time the policy has been in force. This insurance may also at any time be terminated at the option of the Company, on notice to that effect being given to the Insured, in which case the Company shall be liable to repay on demand a ratable proportion of the premium for the unexpired term from the date of the cancelment.Clearly, the Policy provides for pre-payment of premium. Accordingly; "when the policy is tendered the insured must pay the premium unless credit is given or there is a waiver, or some agreement obviating the necessity for prepayment."7To constitute an extension of credit there must be a clear and express agreement therefor."8From the Policy provisions, we fail to find any clear agreement that a credit extension was accorded defendant. And even if it were to be presumed that plaintiff had extended credit from the circumstances of the unconditional delivery of the Policy without prepayment of the premium, yet it is obvious that defendant had not accepted the insurer's offer to extend credit, which is essential for the validity of such agreement.An acceptance of an offer to allow credit, if one was made, is as essential to make a valid agreement for credit, to change a conditional delivery of an insurance policy to an unconditional delivery, as it is to make any other contract. Such an acceptance could not be merely a mental act or state of mind, but would require a promise to pay made known in some manner to defendant.9In this respect, the instant case differs from that involving the same parties entitledPhilippine Phoenix Surety & Insurance Inc. vs. Woodworks, Inc.,10where recovery of the balance of the unpaid premium was allowed inasmuch as in that case "there was not only a perfected contract of insurance but a partially performed one as far as the payment of the agreed premium was concerned." This is not the situation obtaining here where no partial payment of premiums has been made whatsoever.Since the premium had not been paid, the policy must be deemed to have lapsed.The non-payment of premiums does not merely suspend but put, an end to an insurance contract, since the time of the payment is peculiarly of the essence of the contract.11... the rule is that under policy provisions that upon the failure to make a payment of a premium or assessment at the time provided for, the policy shall become void or forfeited, or the obligation of the insurer shall cease, or words to like effect, because the contract so prescribes and because such a stipulation is a material and essential part of the contract. This is true, for instance, in the case of life, health and accident, fire and hail insurance policies.12In fact, if the peril insured against had occurred, plaintiff, as insurer, would have had a valid defense against recovery under the Policy it had issued. Explicit in the Policy itself is plaintiff's agreement to indemnify defendant for loss by fire only"after payment of premium," supra.Compliance by the insured with the terms of the contract is a condition precedent to the right of recovery.The burden is on an insured to keep a policy in force by the payment of premiums, rather than on the insurer to exert every effort to prevent the insured from allowing a policy to elapse through a failure to make premium payments. The continuance of the insurer's obligation is conditional upon the payment of premiums, so that no recovery can be had upon a lapsed policy, the contractual relation between the parties having ceased.13Moreover, "an insurer cannot treat a contract as valid for the purpose of collecting premiums and invalid for the purpose of indemnity."14The foregoing findings are buttressed by section 77 of the Insurance Code (Presidential Decree No. 612, promulgated on December 18, 1974), which now provides that no contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, notwithstanding any agreement to the contrary.WHEREFORE, the judgment appealed from is reversed, and plaintiff's complaint hereby dismissed.G.R. No. 137172 June 15, 1999UCPB GENERAL INSURANCE CO., INC.,petitioner,vs.MASAGANA TELAMART, INC.,respondent.PARDO,J.:The case is an appealvia certiorariseeking to set aside the decision of the Court of Appeals,1affirming with modification that of the Regional Trial Court, Branch 58, Makati, ordering petitioner to pay respondent the sum of P18,645,000.00, as the proceeds of the insurance coverage of respondent's property razed by fire; 25% of the total amount due as attorney's fees and P25,000.00 as litigation expenses, and costs.The facts are undisputed and may be related as follows: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 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.2On 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.3After due trial, on March 10, 1993, the Regional Trial Court, Branch 58, Makati, rendered decision, the dispositive portion of which reads:WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant, as follows:(1) Authorizing and allowing the plaintiff to consign/deposit with this Court the sum of P225,753.95 (refused by the defendant) as full payment of the corresponding premiums for the replacement-renewal policies for Exhibits A, B, C, D and E;(2) Declaring plaintiff to have fully complied with its obligation to pay the premium thereby rendering the replacement-renewal policy of Exhibits A, B, C, D and E effective and binding for the duration May 22, 1992 until May 22, 1993; and, ordering defendant to deliver forthwith to plaintiff the said replacement-renewal policies;(3) Declaring Exhibits A & B, in force from August 22, 1991 up to August 23, 1992 and August 9, 1991 to August 9, 1992, respectively; and(4) Ordering the defendant to pay plaintiff the sums of: (a) P18,645,000.00 representing the latter's claim for indemnity under Exhibits A, B & C 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.All other claims and counterclaims asserted by the parties are denied and/or dismissed, including plaintiff's claim for interests.SO ORDERED.Makati, Metro-Manila, March 10, 1993.ZOSIMO Z. ANGELES.Judge.4In due time, petitioner appealed to the Court of Appeals.5On September 7, 1998, the Court of Appeals promulgated its decision6affirming that of the Regional Trial Court with the modification that item No. 3 of the dispositive portion was deleted, and the award of attorney's fees was reduced to 10% of the total amount due.7The Court of Appeals held that following previous practise, respondent was allowed a sixty (60) to ninety (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.Hence, this appeal.By resolution adopted on March 24, 1999, we required respondent to comment on the petition, not to file a motion to dismiss within ten (10) days from notice.8On April 22, 1999, respondent filed its comment.9Respondent submits that the Court of Appeals correctly ruled that no timely notice of non-renewal was sent. The notice of non-renewal sent to broker Zuellig which claimed that it verbally notified the insurance agency but not respondent itself did not suffice. Respondent submits further that the Court of Appeals did not err in finding that there existed a sixty (60) to ninety (90) days credit agreement between UCPB and Masagana, and that, finally, the Supreme Court could not review factual findings of the lower court affirmed by the Court of Appeals.10We give due course to the appeal.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.11The parties may not agree expressly or impliedly on the extension of creditor time to pay the premium and consider the policy binding before actual payment.The case ofMalayan Insurance Co., Inc. vs. Cruz-Arnaldo,12cited by the Court of Appeals, is not applicable. In that case, payment of the premium was in fact actually made on December 24, 1981, and the fire occurred on January 18, 1982. Here, the payment of the premium for renewal of the policies was tendered on July 13, 1992, a month after the fire occurred on June 13, 1992. The assured did not even give the insurer a notice of loss within a reasonable time after occurrence of the fire.WHEREFORE, the Court hereby REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-G.R. CV No. 42321. Inlieuthereof the Court renders judgment dismissing respondent's complaint and petitioner's counterclaims thereto filed with the Regional Trial Court, Branch 58, Makati City, in Civil Case No. 92-2023. Without costs.1wphi1.ntSO ORDERED.G.R. No. L-22684 August 31, 1967PHILIPPINE PHOENIX SURETY & INSURANCE, INC.,plaintiff-appellee,vs.WOODWORKS, INC.,defendant-appellant.Zosimo Rivas for defendant-appellant.Manuel O. Chan for plaintiff-appellee.DIZON,J.:Appeal upon a question of law taken by Woodworks, Inc. from the judgment of the Court of First Instance of Manila in Civil Case No. 50710 "ordering the defendant, Woodworks, Inc. to pay to the plaintiff, Philippine Phoenix Surety & Insurance, Inc., the sum of P3,522.09 with interest thereon at the legal rate of 6% per annum from the date of the filing of the complaint until fully paid, and costs of the suit."Appellee Philippine Phoenix Surety & Insurance Co., Inc. commenced this action in the Municipal Court of Manila to recover from appellant Woodworks, Inc. the sum of P3,522.09, representing the unpaid balance of the premiums on a fire insurance policy issued by appellee in favor of appellant for a term of one year from April 1, 1960 to April 1, 1961. From an adverse decision of said court, Woodworks, Inc. appealed to the Court of First Instance of Manila (Civil Case No. 50710) where the parties submitted the following stipulation of facts, on the basis of which the appealed decision was rendered:That plaintiff and defendant are both corporations duly organized and existing under and by virtue of the laws of the Philippines;That on April 1, 1960, plaintiff issued to defendant Fire Policy No. 9652 for the amount of P300,000.00, under the terms and conditions therein set forth in said policy a copy of which is hereto attached and made a part hereof as Annex "A";That the premiums of said policy as stated in Annex "A" amounted to P6,051.95; the margin fee pursuant to the adopted plan as an implementation of Republic Act 2609 amounted to P363.72, copy of said adopted plan is hereto attached as Annex "B" and made a part hereof, the documentary stamps attached to the policy was P96.42;That the defendant paid P3,000.00 on September 22, 1960 under official receipt No. 30245 of plaintiff;That plaintiff made several demands on defendant to pay the amount of P3,522.09.1wph1.tIn the present appeal, appellant claims that the courta quocommitted the following errors:I. The lower court erred in stating that in fire insurance policies the risk attached upon the issuance and delivery of the policy to the insured.II. The lower court erred in deciding that in a perfected contract of insurance non-payment of premium does not cancel the policy.III. The lower court erred in deciding that the premium in the policy was still collectible when the complaint was filed.IV. The lower court erred in deciding that a partial payment of the premium made the policy effective during the whole period of the policy.It is clear from the foregoing that on April 1, 1960 Fire Insurance Policy No. 9652 was issued by appellee and delivered to appellant, and that on September 22 of the same year, the latter paid to the former the sum of P3,000.00 on account of the total premium of P6,051.95 due thereon. There is, consequently, no doubt at all that, as between the insurer and the insured, there was not only a perfected contract of insurance but a partially performed one as far as the payment of the agreed premium was concerned. Thereafter the obligation of the insurer to pay the insured the amount for which the policy was issued in case the conditions therefor had been complied with, arose and became binding upon it, while the obligation of the insured to pay the remainder of the total amount of the premium due became demandable.We can not agree with appellant's theory that non-payment by it of the premium due, produced the cancellation of the contract of insurance. Such theory would place exclusively in the hands of one of the contracting parties the right to decide whether the contract should stand or not. Rather the correct view would seem to be this: as the contract had become perfected, the parties could demand from each other the performance of whatever obligations they had assumed. In the case of the insurer, it is obvious that it had the right to demand from the insured the completion of the payment of the premium due or sue for the rescission of the contract. As it chose to demand specific performance of the insured's obligation to pay the balance of the premium, the latter's duty to pay is indeed indubitable.Having thus resolved that the fourth and last assignment of error submitted in appellant's brief is without merit, the first three assignments of error must likewise be overruled as lacking in merit.Wherefore, the appealed decision being in accordance with law and the evidence, the same is hereby affirmed, with costs.Tibay v CA G.R. No. 119655. May 24, 1996J. Bellosillo:

Facts:Fortune Life issued a fire insurance Policy to Tibay on her two-storey residential building at Zobel Street, Makati City.The insurancewas for P600,000.00 covering the period from January 23, 1987 to January 23, 1988. On January 23 1987, Tibay only paid P600.00 of 3,000 peso premium and left a balance.The insured building was completely destroyed by fire. Tibay then paid the balance. On the same day, she filed aclaimon the policy. Herclaimwas accordingly referred to theadjuster, Goodwill, which immediately wrote Violeta requesting her to furnish it with the necessary documents for the investigation andprocessingof herclaim. Petitioner complied, and she signed a non-waiver agreement.Fortune denied theclaimforviolation ofthe InsuranceCode. Tibay sued for damages in the amount of P600,000.00 representing the total coverage of the policy.The trial court ruled for petitioners and made fortune liable for the total value of the insured building and personal properties. The Court of Appeals reversed the court by removing liability from Fortune after returning the premium.Hence this petition forreview.The petitioner contended that Fortune remained liable under the subject fire insurance policy in spite of the failure of petitioners to pay their premium in full.

Issue: May a fire insurance policy be valid, binding and enforceable upon mere partial payment of premium?

Held: No. Petition dismissed.

Ratio:The pertinent provisions read:2. This policy including anyrenewalthereof and/or any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the Company in the manner provided herein.This policy shall be deemed effective, valid and binding upon the Company only when the premiums therefor have actually been paid in full and duly acknowledged in a receipt signed by any authorized official of the companyWhere the premium has only been partially paid and the balance paid only after the peril insured against has occurred,the insurancecontract did not take effect and the insured cannot collect at all on the policy.The InsuranceCodewhich says that no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium has been paid.What does unless and until the premium thereof has been paid mean?Escosura v. San Miguel- the legislative practice was to interpret with pay in accordance to the intention of distinguish between full and partial payment, where the modifying term is used.Petitioners used Philippine Phoenix v. Woodworks, where partial payment of the premium made the policy effective during the whole period of the policy.The SC didnt consider the 1967 Phoenix case as persuasive due to the different factual scenario.In Makati Tuscany v CA, the parties mutually agreed that the premiums could be paid in installments, hence, this Court refused to invalidatethe insurancepolicy.Nothing inArticle77 of theCodesuggested that the parties may not agree to allow payment of the premiums in installment, or to consider the contract as valid and binding upon payment of the first premium.Phoenix and Tuscany demonstrated the waiver of prepayment in full by the insurer. In this case however, there was no waiver. There was a stipulation that the policy wasnt in force until the premium has been fully paid and receipted.There was no juridical tie of indemnification from the fractional payment of premium.The insurancecontract itself expressly provided that the policy would be effective only when the premium was paid in full.Verily, it is elemental law that the payment of premium is requisite to keep the policy of insurance in force. If the premium is not paid in the manner prescribed in the policy as intended by the parties the policy is ineffective. Partial payment even when accepted as a partial payment will not keep the policy alive.South Sea v CA stipulated 2 exceptions to the requirement of payment of the entire premium as a prerequisite to the validity ofthe insurancecontract. These are when in casethe insurancecoverage relates to life or insurance when a grace period applies, and when the insurer makes a written acknowledgment of the receipt of premium to be conclusive evidence of payment.Hence, in the absence of clear waiver of prepayment in full by the insurer, the insured cannot collect on the proceeds of the policy.The terms ofthe insurancepolicy constitute the measure of the insurers liability. In the absence of statutory prohibition to the contrary, insurance companies have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not inconsistent withpublicpolicy.Dissent:J. VitugAll the calculations of the company are based on the hypothesis of prompt payments. They not only calculate on the receipt of the premiums when due, but on the compounding interest upon them. It is on this basis that they are enabled to offer assurance at the favorable rates they do.The failure of appellants to fully pay their premium prevented the contract of insurance from becoming binding an Fortune. This series of acts is tainted with misrepresentation and violates the uberrimae fidae principle of insurance contracts.Tibay had entered into a "Non-Waiver Agreement" with theadjusterwhich permitted Fortune toclaimnon-payment of premium as a defense.The law neither requires, nor measures the strength of the vinculum juris by any specific amount of premium payment. Payment on the premium, partly or in full, is made by the insured which the insurer accepts. In fine, it is either that a juridical tie exists (by such payment) or that it is not extant at all (by an absence thereof). Once the juridical relation comes into being, the full efficacy follows. This is a partially performed contract.The non-payment of the balance shouldnt result in anautomaticcancellation of the contract; otherwise, the right to decide the effectivity of the contract would become potestative.Instead, the parties should be able to demand from each other the performance of whatever obligations they had assumed or, if desired, sue timely for the rescission of the contract.In the meanwhile, the contract endures, and an occurrence of the risk insured riggers the insurer's liability. Also, legal compensation arises where insurer's liability to the insured would simply be reduced by the balance of the premium.It must here be noted that the insured had made, and the insurer had accepted partial premium payment on the policy weeks before the risk insured against took place. An insurance is an aleatory contract effective upon its perfection although the occurrence of a condition or event may later dictate the demandability of certain obligations. Fortunes stipulation that insurance shall not "be . . . in force until the premium has been fully paid," and that it "shall be deemed effective, valid and binding upon the company only when the premiums therefor have actually been paid in full and duly acknowledged," override the efficaciousness ofthe insurancecontract despite the payment and acceptance.Article78 ofthe InsuranceCodeAn 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 the premium is actually paidEven if a portion was paid in the premium,the insurancecoverage becomes effective and binding, any stipulation in the policy to the contrary notwithstanding.G.R. No. 95546 November 6, 1992MAKATI TUSCANY CONDOMINIUM CORPORATION,petitioner,vs.THE COURT OF APPEALS, AMERICAN HOME ASSURANCE CO., represented by American International Underwriters (Phils.), Inc.,respondent.BELLOSILLO,J.:This case involves a purely legal question: whether payment by installment of the premiums due on an insurance policy invalidates the contract of insurance, in view of Sec. 77 of P.D. 612, otherwise known as the Insurance Code, as amended, which provides:Sec. 77. An insurer is entitled to the payment of the premium as soon as the thing is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.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 No. AH-CPP-9210452 on the latter's building and premises, for a period beginning 1 March 1982 and ending 1 March 1983, with a total premium of P466,103.05. The premium was paid on installments on 12 March 1982, 20 May 1982, 21 June 1982 and 16 November 1982, all of which were accepted by private respondent.On 10 February 1983, private respondent issued to petitioner Insurance Policy No. AH-CPP-9210596, 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 on 13 April 1983, 13 July 1983, 3 August 1983, 9 September 1983, and 21 November 1983. All payments were likewise accepted by private respondent.On 20 January 1984, the policy was again renewed and private respondent issued to petitioner Insurance Policy No. AH-CPP-9210651 for the period 1 March 1984 to 1 March 1985. On this renewed policy, petitioner made two installment payments, both accepted by private respondent, the first on 6 February 1984 for P52,000.00 and the second, on 6 June 1984 for P100,000.00. Thereafter, petitioner refused to pay the balance of the premium.Consequently, private respondent filed an action to recover the unpaid balance of P314,103.05 for Insurance Policy No. AH-CPP-9210651.In its answer with counterclaim, petitioner admitted the issuance of Insurance Policy No. AH-CPP-9210651. 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; and3. Subject to no loss prior to premium payment. If there be any loss such is not covered.Petitioner 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.After some incidents, petitioner and private respondent moved for summary judgment.On 8 October 1987, the trial court dismissed the complaint and the counterclaim upon the following findings:While it is true that the receipts issued to the defendant contained the aforementioned reservations, it is equally true that payment of the premiums of the three aforementioned policies (being sought to be refunded) were made during the lifetime or term of said policies, hence, it could not be said, inspite of the reservations, that no risk attached under the policies. Consequently, defendant's counterclaim for refund is not justified.As regards the unpaid premiums on Insurance Policy No. AH-CPP-9210651, in view of the reservation in the receipts ordinarily issued by the plaintiff on premium payments the only plausible conclusion is that plaintiff has no right to demand their payment after the lapse of the term of said policy on March 1, 1985. Therefore, the defendant was justified in refusing to pay the same.1Both parties appealed from the judgment of the trial court. Thereafter, the Court of Appeals rendered a decision2modifying that of the trial court by ordering herein petitioner to pay the balance of the premiums due on Policy No. AH-CPP-921-651, or P314,103.05 plus legal interest until fully paid, and affirming the denial of the counterclaim. The appellate court thus explained The obligation to pay premiums when due is ordinarily as indivisible obligation to pay the entire premium. Here, the parties herein agreed to make the premiums payable in installments, and there is no pretense that the parties never envisioned to make the insurance contract binding between them. It was renewed for two succeeding years, the second and third policies being a renewal/replacement for the previous one. And the insured never informed the insurer that it was terminating the policy because the terms were unacceptable.While it may be true that under Section 77 of the Insurance Code, the parties may not agree to make the insurance contract valid and binding without payment of premiums, there is nothing in said section which suggests that the parties may not agree to allow payment of the premiums in installment, or to consider the contract as valid and binding upon payment of the first premium. Otherwise, we would allow the insurer to renege on its liability under the contract, had a loss incurred (sic) before completion of payment of the entire premium, despite its voluntary acceptance of partial payments, a result eschewed by a basic considerations of fairness and equity.To our mind, the insurance contract became valid and binding upon payment of the first premium, and the plaintiff could not have denied liability on the ground that payment was not made in full, for the reason that it agreed to accept installment payment. . . .3Petitioner now asserts that its payment by installment of the premiums for the insurance policies for 1982, 1983 and 1984 invalidated said policies because of the provisions of Sec. 77 of the Insurance Code, as amended, and by the conditions stipulated by the insurer in its receipts, disclaiming liability for loss for occurring before payment of premiums.It argues that where the premiums is not actually paid in full, the policy would only be effective if there is an acknowledgment in the policy of the receipt of premium pursuant to Sec. 78 of the Insurance Code. The absence of an express acknowledgment in the policies of such receipt of the corresponding premium payments, and petitioner's failure to pay said premiums on or before the effective dates of said policies rendered them invalid. Petitioner thus concludes that there cannot be a perfected contract of insurance upon mere partial payment of the premiums because under Sec. 77 of the Insurance Code, no contract of insurance is valid and binding unless the premium thereof has been paid, notwithstanding any agreement to the contrary. As a consequence, petitioner seeks a refund of all premium payments made on the alleged invalid insurance policies.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 insurer's 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 prepared in full.We therefore sustain the Court of Appeals. We quote with approval the well-reasoned findings and conclusion of the appellate court contained in its Resolution denying the motion to reconsider its Decision While the import of Section 77 is that prepayment of premiums is strictly required as a condition to the validity of the contract, We are 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 (De Leon, the Insurance Code, at p. 175). 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.4The reliance by petitioner onArce vs.Capital Surety and InsuranceCo.5is unavailing because the facts therein are substantially different from those in the case at bar. InArce, no payment was made by the insured at all despite the grace period given. In the case before Us, petitioner paid the initial installment and thereafter made staggered payments resulting in full payment of the 1982 and 1983 insurance policies. For the 1984 policy, petitioner paid two (2) installments although it refused to pay the balance.It appearing from the peculiar circumstances that the parties actually intended to make 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 momentary.WHEREFORE, finding no reversible error in the judgment appealed from, the same is AFFIRMED. Costs against petitioner.SO ORDERED.G.R. No. 165585 November 20, 2013GOVERNMENT SERVICE INSURANCE SYSTEM,Petitioner,vs.PRUDENTIAL GUARANTEE AND ASSURANCE, INC., DEVELOPMENT BANK OF THE PHILIPPINES and LAND BANK OF THE PHILIPPINES,Respondents.x - - - - - - - - - - - - - - - - - - - - - - - xG.R. No. 176982GOVERNMENT SERVICE INSURANCE SYSTEM,Petitioner,vs.PRUDENTIAL GUARANTEE AND ASSURANCE, INC.,Respondent.D E C I S I O NPERLAS-BERNABE,J.:Assailed in these consolidated petitions for review on Certiorari1are separate issuances of the Court of Appeals (CA) in relation to the complaint for sum of money filed by Prudential Guarantee and Assurance, Inc. (PGAI) against the Government Service Insurance System (GSIS) before the Regional Trial Court of Makati City, Branch 149 (RTC), docketed as Civil Case No. 01-1634.In particular, the petition in G.R. No. 165585 assails the Decision2dated May 26, 2004 and Resolution3dated October 6, 2004 of the CA in CA-G.R. SP No. 69289 which affirmed the Order4dated February 14, 2002, as well as the Order,5Notices of Garnishment,6and Writ of Execution,7all dated February 19, 2002, issued by the RTC authorizing execution pending appeal.On the other hand, the petition in G.R. No. 176982 assails the Decision8dated October 30, 2006 and Resolution9dated March 12, 2007 of the CA in CA-G.R. CV No. 73965 which dismissed the appeal filed by GSIS, affirming with modification the Order10dated January 11, 2002 of the RTC rendering judgment on the pleadings.The FactsSometime in March 1999, the National Electrification Administration (NEA) entered into a Memorandum of Agreement11(MOA) with GSIS insuring all real and personal properties mortgaged to it by electrical cooperatives under an Industrial All Risks Policy (IAR policy).12The total sum insured under the IAR policy wasP16,731,141,166.80, out of which, 95% orP15,894,584,108.40 was reinsured by GSIS with PGAI for a period of one year or from March 5, 1999 to March 5, 2000.13As reflected in Reinsurance Request Note No. 99-15014(reinsurance cover) and the Reinsurance Binder15dated April 21, 1999 (reinsurance binder), GSIS agreed to pay PGAI reinsurance premiums in the amount ofP32,885,894.52 per quarter or a total ofP131,543,578.08.16While GSIS remitted to PGAI the reinsurance premiums for the first three quarters, it, however, failed to pay the fourth and last reinsurance premium due on December 5, 1999 despite demands. This prompted PGAI to file, on November 15, 2001, a Complaint17for sum of money (complaint) against GSIS before the RTC, docketed as Civil Case No. 01-1634.In its complaint, PGAI alleged, among others, that: (a) after it had issued the IAR policy, it further reinsured the risks covered under the said reinsurance with reputable reinsurers worldwide such as Lloyds of London, Copenhagen Re, Cigna Singapore, CCR, Generali, and Arig;18(b) the first three reinsurance premiums were paid to PGAI by GSIS and, in the same vein, NEA paid the first three reinsurance premiums due to GSIS;19(c) GSIS failed to pay PGAI the fourth and last reinsurance premium due on December 5, 1999;20(d) the IAR policy remained in full force and effect for the entire insurable period and, in fact, the losses/damages on various risks reinsured by PGAI were paid and accordingly settled by it;21(e) PGAI is under continuous pressure from its reinsurers in the international market to settle the matter;22and (f) GSIS acknowledged its obligation to pay the last reinsurance premium as it, in turn, demanded from NEA the fourth and last reinsurance premium.23In its Answer,24GSIS admitted, among others, that: (a) its request for reinsurance cover was accepted by PGAI in a reinsurance binder;25(b) it remitted to PGAI the first three reinsurance premiums which were paid by NEA;26and (c) it failed to remit the fourth and last reinsurance premium to PGAI.27It, however, denied, inter alia, that: (a) it had acknowledged its obligation to pay the last quarters reinsurance premium to PGAI;28and (b) the IAR policy remained in full force and effect for the entire insurable period of March 5, 1999 to March 5, 2000.29GSIS also proffered the following affirmative defenses: (a) the complaint states no cause of action against GSIS because the non-payment of the last reinsurance premium only renders the reinsurance contract ineffective, and does not give PGAI a right of action to collect;30(b) pursuant to the regulations issued by the Commission on Audit, GSIS is prohibited from advancing payments to PGAI occasioned by the failure of the principal insured, NEA, to pay the insurance premium;31and (c) PGAIs cause of action lies against NEA since GSIS merely acted as a conduit.32By way of counterclaim, GSIS prayed that PGAI be ordered to pay exemplary damages, including litigation expenses, and costs of suit.33On December 18, 2001, PGAI filed a Motion for Judgment on the Pleadings34averring that GSIS essentially admitted the material allegations of the complaint, such as: (a) the existence of the MOA between NEA and GSIS; (b) the existence of the reinsurance binder between GSIS and PGAI; (c) the remittance by GSIS to PGAI of the first three quarterly reinsurance premiums; and (d) the failure/refusal of GSIS to remit the fourth and last reinsurance premium.35Hence, PGAI prayed that the RTC render a judgment on the pleadings pursuant to Section 1, Rule 34 of the Rules of Court (Rules). GSIS opposed36the foregoing motion by reiterating the allegations and defenses in its Answer.On January 11, 2002, the RTC issued an Order37(January 11, 2002 Order) granting PGAIs Motion for Judgment on the Pleadings. It observed that the admissions of GSIS that it paid the first three quarterly reinsurance premiums to PGAI affirmed the validity of the contract of reinsurance between them. As such, GSIS cannot now renege on its obligation to remit the last and remaining quarterly reinsurance premium.38It further pointed out that while it is true that the payment of the premium is a requisite for the validity of an insurance contract as provided under Section 77 of Presidential Decree No. (PD) 612,39otherwise known as "The Insurance Code," it was held in Makati Tuscany Condominium Corp. v. CA40(Makati Tuscany) that insurance policies are valid even if the premiums were paid in installments, as in this case.41Thus, in view of the foregoing, the RTC ordered GSIS to pay PGAI the last quarter reinsurance premium in the sum ofP32,885,894.52, including interests amounting toP6,519,515.91 as of July 31, 2000 until full payment, attorneys fees, and costs of suit.42Dissatisfied, GSIS filed a notice of appeal.43Meanwhile, PGAI filed a Motion for Execution Pending Appeal44based on the following reasons: (a) GSIS appeal was patently dilatory since it already acknowledged the validity of PGAIs claim;45(b) GSIS posted no valid defense as its Answer raised no genuine issues;46and (c) PGAI would suffer serious and irreparable injury as it may be blacklisted as a consequence of the non-payment of premiums due.47PGAI also manifested its willingness to post a sufficient surety bond to answer for any resulting damage to GSIS.48The latter opposed49the motion asserting that there lies no sufficient ground or urgency to justify execution pending appeal. It also claimed that all its funds and properties are exempted from execution citing Section 39 of Republic Act No. (RA) 8291,50otherwise known as "The Government Service Insurance System Act of 1997."51On February 14, 2002, the RTC issued an Order52(February 14, 2002 Order) granting PGAIs Motion for Execution Pending Appeal, conditioned on the posting of a bond. It further held that only the GSIS Social Insurance Fund is exempt from execution. Accordingly, PGAI duly posted a surety bond which the RTC approved through an Order53dated February 19, 2002, resulting to the issuance of a writ of execution54and notices of garnishment55(February 19, 2002 issuances), all of even date, against GSIS.The CA Proceedings Antecedent to G.R. No. 165585Aggrieved by the RTCs February 14, 2002 Order, as well as the February 19, 2002 issuances, GSIS without first filing a motion for reconsideration (from the said order of execution) or a sufficient supersedeas bond56 filed on February 26, 2002 a petition for certiorari57before the CA, docketed as CA-G.R. SP No. 69289, against the RTC and PGAI. It also impleaded in the said petition the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) as nominal parties so as to render them subject to the writs and processes of the CA.58In its petition, GSIS argued that: (a) none of the grounds proffered by PGAI justifies the issuance of a writ of execution pending appeal;59and (b) all funds and assets of GSIS are exempt from execution and levy in accordance with RA 8291.60On April 4, 2002, the CA issued a temporary restraining order (TRO)61enjoining the garnishment of GSIS funds with LBP and DBP. Nevertheless, since the TROs effectivity lapsed, GSIS funds with the LBP were eventually garnished.62On May 26, 2004, the CA rendered a Decision63dismissing GSIS petition, upholding, among others, the validity of the execution pending appeal pursuant to the RTCs February 14, 2002 Order as well as the February 19, 2002 issuances. It found that the impending blacklisting of PGAI constitutes a good reason for allowing the execution pending appeal (also known as "discretionary execution") considering that the imposition of international sanctions on any single local insurance company puts in grave and immediate jeopardy not only the viability of that company but also the integrity of the entire local insurance system including that of the state insurance agency. It pointed out that the insurance business thrives on credibility which is maintained by honoring financial commitments.On the claimed exemption of GSIS funds from execution, the CA held that such exemption only covers funds under the Social Insurance Fund which remains liable for the payment of benefits like retirement, disability and death compensation and not those covered under the General Insurance Fund, as in this case, which are meant for investment in the business of insurance and reinsurance.64GSIS motion for reconsideration65was denied by the CA in a Resolution66dated October 6, 2004. Hence, the petition for review on certiorari in G.R. No. 165585.67The CA Proceedings Antecedent to G.R. No. 176982Separately, GSIS also assailed the RTCs January 11, 2002 Order which granted PGAIs Motion for Judgment on the Pleadings through an appeal68filed on October 7, 2002, docketed as CA G.R. CV No. 73965.GSIS averred that the RTC gravely erred in: (a) rendering judgment on the pleadings since it specifically denied the material allegations in PGAIs complaint; (b) ordering execution pending appeal since there are no justifiable reasons for the same; and (c) effecting execution against funds and assets of GSIS given that RA 8291 exempts the same from levy, execution and garnishment.69For its part, PGAI maintained that: (a) the judgment on the pleadings was in order given that GSIS never disputed the facts as alleged in its complaint; (b) the discretionary execution was proper in view of the dilatory methods employed by GSIS in order to evade the payment of a valid obligation; and (c) the general insurance fund of GSIS, which was attached and garnished by the RTC, is not exempt from execution.70In a Decision71dated October 30, 2006, the CA sustained the RTCs January 11, 2002 Order but deleted the awards of interest and attorneys fees for lack of factual and legal basis.72The CA ruled that judgment on the pleadings was proper since GSIS did not specifically deny the genuineness, due execution, and perfection of its reinsurance contract with PGAI.73In fact, PGAI even settled reinsurance claims during the covering period rendering the reinsurance contract not only perfected but partially executed as well.74Passing on the issue of the exemption from execution of GSIS funds, the CA, citing Rubia v. GSIS75(Rubia), held that the exemption provided for by RA 8291 is not absolute since it only pertains to the social security benefits of its members; thus, funds used by the GSIS for business investments and commercial ventures, as in this case, may be attached and garnished.76GSIS motion for reconsideration77was denied by the CA in a Resolution78dated March 12, 2007. Hence, the present petition for review on certiorari in G.R. No. 176982.79The Issues Before the CourtIn these consolidated petitions, the essential issues are the following: (a) in G.R. No. 165585, whether the CA erred in (1) upholding the RTCs February 14, 2002 Order authorizing execution pending appeal, and (2) ruling that only the Social Insurance Fund and not the General Fund of the GSIS is exempt from garnishment; and (b) in G.R. No. 176982, whether the CA erred in sustaining the RTCs January 11, 2002 Order rendering judgment on the pleadings.The Courts RulingThe petitions are partly meritorious.A. Good reasons to allow execution pending appeal and the nature of the exemption under Section 39 of RA 8291.The execution of a judgment pending appeal is an exception to the general rule that only a final judgment may be executed.80In order to grant the same pursuant to Section 2,81Rule 39 of the Rules, the following requisites must concur: (a) there must be a motion by the prevailing party with notice to the adverse party; (b) there must be a good reason for execution pending appeal; and (c) the good reason must be stated in a special order.82Good reasons call for the attendance of compelling circumstances warranting immediate execution for fear that favorable judgment may yield to an empty victory. In this regard, the Rules do not categorically and strictly define what constitutes "good reason," and hence, its presence or absence must be determined in view of the peculiar circumstances of each case. As a guide, jurisprudence dictates that the "good reason" yardstick imports a superior circumstance that will outweigh injury or damage to the adverse party.83Corollarily, the requirement of "good reason" does not necessarily entail unassailable and flawless basis but at the very least, an invocation thereof must be premised on solid footing.84In the case at bar, the RTC, as affirmed by the CA, granted PGAIs motion for execution pending appeal on the ground that the impending sanctions against it by foreign underwriters/reinsurers constitute good reasons therefor. It must, however, be observed that PGAI has not proffered any evidence to substantiate its claim, as it merely presented bare allegations thereon. It is hornbook doctrine that mere allegations do not constitute proof. As held in Real v. Belo,85"it is basic in the rule of evidence that bare allegations, unsubstantiated by evidence, are not equivalent to proof. In short, mere allegations are not evidence."86Hence, without any sufficient basis to support the existence of its alleged "good reasons," it cannot be said that the second requisite to allow an execution pending appeal exists. To reiterate, the requirement of "good reasons" must be premised on solid footing so as to ensure that the "superior circumstance" which would impel immediate execution is not merely contrived or based on speculation. This, however, PGAI failed to demonstrate in the present case. In fine, the Court therefore holds that the CAs affirmance of the RTCs February 14, 2002 Order authorizing execution pending appeal, as well as the February 19, 2002 issuances related thereto, was improper.Nevertheless, while an execution pending appeal should not lie in view of the above-discussed reasons, it must be noted that the funds and assets of GSIS may after the resolution of the appeal and barring any provisional injunction thereto be subject to execution, attachment, garnishment or levy since the exemption under Section 39 of RA 829187does not operate to deny private entities from properly enforcing their contractual claims against GSIS.88This has been established in the case of Rubia wherein the Court held as follows:The declared policy of the State in Section 39 of the GSIS Charter granting GSIS an exemption from tax, lien, attachment, levy, execution, and other legal processes should be read together with the grant of power to the GSIS to invest its "excess funds" under Section 36 of the same Act. Under Section 36, the GSIS is granted the ancillary power to invest in business and other ventures for the benefit of the employees, by using its excess funds for investment purposes. In the exercise of such function and power, the GSIS is allowed to assume a character similar to a private corporation. Thus, it may sue and be sued, as also explicitly granted by its charter.Needless to say, where proper, under Section 36, the GSIS may be held liable for the contracts it has entered into in the course of its business investments. For GSIS cannot claim a special immunity from liability in regard to its business ventures under said Section.Nor can it deny contracting parties, in our view, the right of redress and the enforcement of a claim, particularly as it arises from a purely contractual relationship of a private character between an individual and the GSIS.89(Emphases supplied and citations omitted)Thus, the petition in G.R. No. 165585 is partly granted.B. Propriety of judgment on the pleadings.Judgment on the pleadings is appropriate when an answer fails to tender an issue, or otherwise admits the material allegations of the adverse partys pleading. The rule is stated in Section 1, Rule 34 of the Rules which reads as follows:Sec. 1. Judgment on the pleadings. Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse partys pleading, the court may, on motion of that party, direct judgment on such pleading. x x x.In this relation, jurisprudence dictates that an answer fails to tender an issue if it does not comply with the requirements of a specific denial as set out in Sections 890and 10,91Rule 8 of the Rules, resulting in the admission of the material allegations of the adverse partys pleadings.92As such, it is a form of judgment that is exclusively based on the submitted pleadings without the introduction of evidence as the factual issues remain uncontroverted.93In this case, records disclose that in its Answer, GSIS admitted the material allegations of PGAIs complaint warranting the grant of the relief prayed for. In particular, GSIS admitted that: (a) it made a request for reinsurance cover which PGAI accepted in a reinsurance binder effective for one year;94(b) it remitted only the first three reinsurance premium payments to PGAI;95(c) it failed to pay PGAI the fourth and final reinsurance premium installment;96and (d) it received demand letters from PGAI.97It also did not refute the allegation of PGAI that it settled reinsurance claims during the reinsured period. On the basis of these admissions, the Court finds that the CA did not err in affirming the propriety of a judgment on the pleadings.GSIS affirmative defense that the non-payment of the last reinsurance premium merely rendered the contract ineffective pursuant to Section 7798of PD 612 no longer involves any factual issue, but stands solely as a mere question of law in the light of the foregoing admissions hence allowing for a judgment on the pleadings. Besides, in the case of Makati Tuscany, the Court already ruled that the non-payment of subsequent installment premiums would not prevent the insurance contract from taking effect; that the parties intended to make the insurance contract valid and binding is evinced from the fact that the insured paid and the insurer received several reinsurance premiums due thereon, although the former refused to pay the remaining balance, viz: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.We therefore sustain the Court of Appeals. We quote with approval the well-reasoned findings and conclusion of the appellate court contained in its Resolution denying the motion to reconsider its Decision While the import of Section 77 is that prepayment of premiums is strictly required as a condition to the validity of the contract, We are 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 (De Leon, the Insurance Code, at p. 175). 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.[I]n the case before Us, petitioner paid the initial installment and thereafter made staggered payments resulting in full payment of the 1982 and 1983 insurance policies.1wphi1For the 1984 policy, petitioner paid two (2) installments although it refused to pay the balance.It appearing from the peculiar circumstances that the parties actually intended to make 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 momentary.99(Emphases supplied and citation omitted)Thus, owing to the identical complexion of Makati Tuscany with the present case, the Court upholds PGAIs right to be paid by GSIS the amount of the fourth and last reinsurance premium pursuant to the reinsurance contract between them. All told, the petition in G.R. No. 176982 is denied.WHEREFORE, the petition in G.R. No. 165585 is PARTLY GRANTED. The Decision dated May 26, 2004 and Resolution dated October 6, 2004 of the Court of Appeals in CA-G.R. SP No. 69289 are MODIFIED only insofar as it upheld the validity of Prudential Guarantee and Assurance, Inc.s execution pending appeal. In this respect, the Order dated February 14, 2002 of the Regional Trial Court of Makati, Branch 149 as well as all other issuances related thereto are set aside.On the other hand, the petition in G.R. No. 176982 is DENIED. The Decision dated October 30, 2006 and Resolution dated March 12, 2007 in CA-G.R. CV No. 73965 are hereby AFFIRMED.SO ORDERED.DBP Pool of Accredited insurance vs Radio Mindanao Network(2006)Facts:In the evening of July 27, 1988, the radio station of Radio Mindanao Network located at the SSS Building in Bacolod City was burned down causing damage in the amount of over one million pesos. Respondent sought to recover under two insurance policies but the claims were denied on the basis that the case of the loss was an excepted risk under condition no. 6 (c) and (d), to wit:6. This insurance does not cover any loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following consequences, namely:(c) War, invasion, act of foreign enemies, hostilities, or warlike operations (whether war be declared or not), civic war.(d) Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped power.The insurers maintained that based on witnesses and evidence gathered at the site, the fire was caused by the members of the Communist Party of the Philippines/New Peoples Army. Hence the refusal to honor their obligations.The trial court and the CA found in favor of the respondent. In its findings, both courts mentioned the fact that there was no credible evidence presented that the CCP/NPA did in fact cause the fire that gutted the radio station in Bacolod.Issue:WON the insurance companies are liable to pay Radio Mindanao Network under the insurance policies?Held: Yes.The Court will not disturb the factual findings of the appellant and trial courts absent compelling reason. Under this mode of review, the jurisdiction of the court is limited to reviewing only errors of law. Particularly in cases of insurance disputes with regard to excepted risks, it is the insurance companies which have the burden to prove that the loss comes within the purview of the exception or limitation set up. It is sufficient for the insured to prove the fact of damage or loss. Once the insured makes out a prima facie case in its favor, the duty or burden of evidence shifts to the insurer to controvert said prima facie case.G.R. No. 198588 July 11, 2012UNITED MERCHANTS CORPORATION,Petitioner,vs.COUNTRY BANKERS INSURANCE CORPORATION,Respondent.D E C I S I O NCARPIO,J.:The CaseThis Petition for Review on Certiorari1seeks to reverse the Court of Appeals Decision2dated 16 June 2011 and its Resolution3dated 8 September 2011 in CA-G.R. CV No. 85777. The Court of Appeals reversed the Decision4of the Regional Trial Court (RTC) of Manila, Branch 3, and ruled that the claim on the Insurance Policy is void.The FactsThe facts, as culled from the records, are as follows:Petitioner United Merchants Corporation (UMC) is engaged in the business of buying, selling, and manufacturing Christmas lights. UMC leased a warehouse at 19-B Dagot Street, San Jose Subdivision, Barrio Manresa, Quezon City, where UMC assembled and stored its products.On 6 September 1995, UMCs General Manager Alfredo Tan insured UMCs stocks in trade of Christmas lights against fire with defendant Country Bankers Insurance Corporation (CBIC) forP15,000,000.00. The Fire Insurance Policy No. F-HO/95-576 (Insurance Policy) and Fire Invoice No. 12959A, valid until 6 September 1996, states:AMOUNT OF INSURANCE:FIFTEENMILLION PESOSPHILIPPINECURRENCY

x x xPROPERTY INSURED: On stocks in trade only, consisting of Christmas Lights, the properties of the Assured or held by them in trust, on commissions, or on joint account with others and/or for which they are responsible in the event of loss and/or damage during the currency of this policy, whilst contained in the building of one lofty storey in height, constructed of concrete and/or hollow blocks with portion of galvanized iron sheets, under galvanized iron rood, occupied as Christmas lights storage.5On 7 May 1996, UMC and CBIC executed Endorsement F/96-154 and Fire Invoice No. 16583A to form part of the Insurance Policy. Endorsement F/96-154 provides that UMCs stocks in trade were insured against additional perils, to wit: "typhoon, flood, ext. cover, and full earthquake." The sum insured was also increased toP50,000,000.00 effective 7 May 1996 to 10 January 1997. On 9 May 1996, CBIC issued Endorsement F/96-157 where the name of the assured was changed from Alfredo Tan to UMC.On 3 July 1996, a fire gutted the warehouse rented by UMC. CBIC designated CRM Adjustment Corporation (CRM) to investigate and evaluate UMCs loss by reason of the fire. CBICs reinsurer, Central Surety, likewise requested the National Bureau of Investigation (NBI) to conduct a parallel investigation. On 6 July 1996, UMC, through CRM, submitted to CBIC its Sworn Statement of Formal Claim, with proofs of its loss.On 20 November 1996, UMC demanded for at least fifty percent (50%) payment of its claim from CBIC. On 25 February 1997, UMC received CBICs letter, dated 10 January 1997, rejecting UMCs claim due to breach of Condition No. 15 of the Insurance Policy. Condition No. 15 states:If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting in his behalf to obtain any benefit under this Policy; or if the loss or damage be occasioned by the willful act, or with the connivance of the Insured, all the benefits under this Policy shall be forfeited.6On 19 February 1998, UMC filed a Complaint7against CBIC with the RTC of Manila. UMC anchored its insurance claim on the Insurance Policy, the Sworn Statement of Formal Claim earlier submitted, and the Certification dated 24 July 1996 made by Deputy Fire Chief/Senior Superintendent Bonifacio J. Garcia of the Bureau of Fire Protection. The Certification dated 24 July 1996 provides that:This is to certify that according to available records of this office, on or about 6:10 P.M. of July 3, 1996, a fire broke out at United Merchants Corporation located at 19-B Dag[o]t Street, Brgy. Manresa, Quezon City incurring an estimated damage of Fifty-Five Million Pesos (P55,000,000.00) to the building and contents, while the reported insurance coverage amounted to Fifty Million Pesos (P50,000,000.00) with Country Bankers Insurance Corporation.The Bureau further certifies that no evidence was gathered to prove that the establishment was willfully, feloniously and intentionally set on fire.That the investigation of the fire incident is already closed being ACCIDENTAL in nature.8In its Answer with Compulsory Counterclaim9dated 4 March 1998, CBIC admitted the issuance of the Insurance Policy to UMC but raised the following defenses: (1) that the Complaint states no cause of action; (2) that UMCs claim has already prescribed; and (3) that UMCs fire claim is tainted with fraud. CBIC alleged that UMCs claim was fraudulent because UMCs Statement of Inventory showed that it had no stocks in trade as of 31 December 1995, and that UMCs suspicious purchases for the year 1996 did not even amount toP25,000,000.00. UMCs GIS and Financial Reports further revealed that it had insufficient capital, which meant UMC could not afford the allegedP50,000,000.00 worth of stocks in trade.In its Reply10dated 20 March 1998, UMC denied violation of Condition No. 15 of the Insurance Policy. UMC claimed that it did not make any false declaration because the invoices were genuine and the Statement of Inventory was for internal revenue purposes only, not for its insurance claim.During trial, UMC presented five witnesses. The first witness was Josie Ebora (Ebora), UMCs disbursing officer. Ebora testified that UMCs stocks in trade, at the time of the fire, consisted of: (1) raw materials for its Christmas lights; (2) Christmas lights already assembled; and (3) Christmas lights purchased from local suppliers. These stocks in trade were delivered from August 1995 to May 1996. She stated that Straight Cargo Commercial Forwarders delivered the imported materials to the warehouse, evidenced by delivery receipts. However, for the year 1996, UMC had no importations and only bought from its local suppliers. Ebora identified the suppliers as Fiber Technology Corporation from which UMC bought stocks worthP1,800,000.00 on 20 May 1996; Fuze Industries Manufacturer Philippines from which UMC bought stocks worthP19,500,000.00 from 20 January 1996 to 23 February 1996; and Tomco Commercial Press from which UMC bought several Christmas boxes. Ebora testified that all these deliveries were not yet paid. Ebora also presented UMCs Balance Sheet, Income Statement and Statement of Cash Flow. Per her testimony, UMCs purchases amounted toP608,986.00 in 1994;P827,670.00 in 1995; andP20,000,000.00 in 1996. Ebora also claimed that UMC had sales only from its fruits business but no sales from its Christmas lights for the year 1995.The next witness, Annie Pabustan (Pabustan), testified that her company provided about 25 workers to assemble and pack Christmas lights for UMC from 28 March 1996 to 3 July 1996. The third witness, Metropolitan Bank and Trust Company (MBTC) Officer Cesar Martinez, stated that UMC opened letters of credit with MBTC for the year 1995 only. The fourth witness presented was Ernesto Luna (Luna), the delivery checker of Straight Commercial Cargo Forwarders. Luna affirmed the delivery of UMCs goods to its warehouse on 13 August 1995, 6 September 1995, 8 September 1995, 24 October 1995, 27 October 1995, 9 November 1995, and 19 December 1995. Lastly, CRMs adjuster Dominador Victorio testified that he inspected UMCs warehouse and prepared preliminary reports in this connection.On the other hand, CBIC presented the claims manager Edgar Caguindagan (Caguindagan), a Securities and Exchange Commission (SEC) representative, Atty. Ernesto Cabrera (Cabrera), and NBI Investigator Arnold Lazaro (Lazaro). Caguindagan testified that he inspected the burned warehouse on 5 July 1996, took pictures of it and referred the claim to an independent adjuster. The SEC representatives testimony was dispensed with, since the parties stipulated on the existence of certain documents, to wit: (1) UMCs GIS for 1994-1997; (2) UMCs Financial Report as of 31 December 1996; (3) SEC Certificate that UMC did not file GIS or Financial Reports for certain years; and (4) UMCs Statement of Inventory as of 31 December 1995 filed with the BIR.Cabrera and Lazaro testified that they were hired by Central Surety to investigate UMCs claim. On 19 November 1996, they concluded that arson was committed based from their interview withbarangayofficials and the pictures showing that blackened surfaces were present at different parts of the warehouse. On cross-examination, Lazaro admitted that they did not conduct a forensic investigation of the warehouse, nor did they file a case for arson.For rebuttal, UMC presented Rosalinda Batallones (Batallones), keeper of the documents of UCPB General Insurance, the insurer of Perfect Investment Company, Inc., the warehouse owner. When asked to bring documents related to the insurance of Perfect Investment Company, Inc., Batallones brought the papers of Perpetual Investment, Inc.The Ruling of the Regional Trial CourtOn 16 June 2005, the RTC of Manila, Branch 3, rendered a Decision in favor of UMC, the dispositive portion of which reads:WHEREFORE, judgment is hereby rendered in favor of plaintiff and ordering defendant to pay plaintiff:a) the sum ofP43,930,230.00 as indemnity with interest thereon at 6%per annumfrom November 2003 until fully paid;b) the sum ofP100,000.00 for exemplary damages;c) the sum ofP100,000.00 for attorneys fees; andd) the costs of suit.Defendants counterclaim is denied for lack of merit.SO ORDERED.11The RTC found no dispute as to UMCs fire insurance contract with CBIC. Thus, the RTC ruled for UMCs entitlement to the insurance proceeds, as follows:Fraud is never presumed but must be proved by clear and convincing evidence. (see Alonso v. Cebu Country Club, 417 SCRA 115 [2003]) Defendant failed to establish by clear and convincing evidence that the documents submitted to the SEC and BIR were true. It is common business practice for corporations to have 2 sets of reports/statements for tax purposes. The stipulated documents of plaintiff (Exhs. 2 8) may not have been accurate.The conflicting findings ofdefendants adjuster, CRM Adjustment[with stress] and that made by Atty. Cabrera & Mr. Lazaro for Central Surety shall be resolved in favor of the former. Definitely the formers finding is more credible as it was made soon after the fire while that of the latter was done 4 months later. Certainly it would be a different situation as the site was no longer the same after the clearing up operation which is normal after a fire incident. The Christmas lights and parts could have been swept away. Hence the finding of the latter appears to be speculative to benefit the reinsurer and which defendant wants to adopt to avoid liability.The CRM Adjustment reportfound no arson and confirmed substantial stocks in the burned warehouse(Exhs. QQQ) [underscoring supplied]. This is bolstered by the BFP certification that there was no proof of arson and the fire was accidental (Exhs. PPP). The certification by a government agency like BFP is presumed to be a regular performance of official duty. "Absent convincing evidence to the contrary, the presumption of regularity in the performance of official functions has to be upheld." (People vs. Lapira, 255 SCRA 85) The report of UCPB General Insurances adjuster also found no arson so that the burned warehouse owner PIC was indemnified.12Hence, CBIC filed an appeal with the Court of Appeals (CA).The Ruling of the Court of AppealsOn 16 June 2011, the CA promulgated its Decision in favor of CBIC. The dispositive portion of the Decision reads:WHEREFORE, in view of the foregoing premises, the instant appeal is GRANTED and the Decision of the Regional Trial Court, of the National Judicial Capital Region, Branch 3 of the City of Manila dated June 16, 2005 in Civil Case No. 98-87370 is REVERSED and SET ASIDE. The plaintiff-appellees claim upon its insurance policy is deemed avoided.SO ORDERED.13The CA ruled that UMCs claim under the Insurance Policy is void. The CA found that the fire was intentional in origin, considering the array of evidence submitted by CBIC, particularly the pictures taken and the reports of Cabrera and Lazaro, as opposed to UMCs failure to explain the details of the alleged fire accident. In addition, it found that UMCs claim was overvalued through fraudulent transactions. The CA ruled:We have meticulously gone over the entirety of the evidence submitted by the parties and have come up with a conclusion that the claim of the plaintiff-appellee was indeed overvalued by transactions which were fraudulently concocted so that the full coverage of the insurance policy will have to be fully awarded to the plaintiff-appellee.First, We turn to the backdrop of the plaintiff-appellees case, thus, [o]n September 6, 1995 its stocks-in-trade were insured for Fifteen Million Pesos and on May 7, 1996 the same was increased to 50 Million Pesos. Two months thereafter, a fire gutted the plaintiff-appellees warehouse.Second, We consider the reported purchases of the plaintiff-appellee as shown in its financial report dated December 31, 1996 vis--vis the testimony of Ms. Ebora thus:1994 -P608,986.001995 -P827,670.001996 -P20,000,000.00 (more or less) which were purchased for a period of one month.Third, We shall also direct our attention to the alleged true and complete purchases of the plaintiff-appellee as well as the value of all stock-in-trade it had at the time that the fire occurred. Thus:ExhibitSourceAmount (pesos)Dates Covered

Exhs. "P"-"DD",inclusiveFuze IndustriesManufacturer Phils.19,550,400.00January 20, 1996January 31, 1996February 12, 1996February 20, 1996February 23, 1996

Exhs. "EE"-"HH",inclusiveTomco Commercial Press1,712,000.00December 19, 1995January 24, 1996February 21, 1996November 24, 1995

Exhs. "II"-"QQ",inclusivePrecious BelenTrading2,720,400.00January 13, 1996January 19, 1996January 26, 1996February 3, 1996February 13, 1996February 20, 1996February 27, 1996

Exhs. "RR"-"EEE", inclusiveWisdom Manpower Services361,966.00April 3, 1996April 12, 1996April 19, 1996April 26, 1996May 3, 1996May 10, 1996May 17, 1996May 24, 1996June 7, 1996June 14, 1996June 21, 1996June 28, 1996July 5, 1996

Exhs. "GGG"-"NNN", inclusiveCosts of Letters ofCredit forimported rawmaterials15,159,144.71May 29, 1995June 15, 1995July 5, 1995September 4, 1995October 2, 1995October 27, 1995January 8, 1996March 19, 1996

Exhs. "GGG-11"- "GGG-24","HHH-12", "HHH-22", "III-11", "III-14","JJJ-13", "KKK-11", "LLL-5"SCCFI statements of account384,794.38June 15, 1995June 28, 1995August 1, 1995September 4, 1995September 8, 1995September 11, 1995October 30, 199[5]November 10, 1995December 21, 1995

TOTAL44,315,024.31

Fourth, We turn to the allegation of fraud by the defendant-appellant by thoroughly looking through the pieces of evidence that it adduced during the trial. The latter alleged that fraud is present in the case at bar as shown by the discrepancy of the alleged purchases from that of the reported purchases made by plaintiff-appellee. It had also averred that fraud is present when upon verification of the address of Fuze Industries, its office is nowhere to be found. Also, the defendant-appellant expressed grave doubts as to the purchases of the plaintiff-appellee sometime in 1996 when such purchases escalated to a high 19.5 Million Pesos without any contract to back it up.14On 7 July 2011, UMC filed a Motion for Reconsideration,15which the CA denied in its Resolution dated 8 September 2011. Hence, this petition.The IssuesUMC seeks a reversal and raises the following issues for resolution:I.WHETHER THE COURT OF APPEALS MADE A RULING INCO[N]SISTENT WITH LAW, APPLICABLE JURISPRUDENCE AND EVIDENCE AS TO THE EXISTENCE OF ARSON AND FRAUD IN THE ABSENCE OF "MATERIALLY CONVINCING EVIDENCE."II.WHETHER THE COURT OF APPEALS MADE A RULING INCONSISTENT WITH LAW, APPLICABLE JURISPRUDENCE AND EVIDENCE WHEN IT FOUND THAT PETITIONER BREACHED ITS WARRANTY.16The Ruling of the CourtAt the outset, CBIC assails this petition as defective since what UMC ultimately wants this Court to review are questions of fact. However, UMC argues that where the findings of the CA are in conflict with those of the trial court, a review of the facts may be made. On this procedural issue, we find UMCs claim meritorious.A petition for review under Rule 45 of the Rules of Court specifically provides that only questions of law may be raised. The findings of fact of the CA are final and conclusive and this Court will not review them on appeal,17subject to exceptions as when the findings of the appellate court conflict with the findings of the trial court.18Clearly, the present case falls under the exception. Since UMC properly raised the conflicting findings of the lower courts, it is proper for this Court to resolve such contradiction.Having settled the procedural issue, we proceed to the primordial issue which boils down towhether UMC is entitled to claim from CBIC the full coverage of its fire insurance policy.UMC contends that because it had already established aprima faciecase against CBIC which failed to prove its defense, UMC is entitled to claim the full coverage under the Insurance Policy. On the other hand, CBIC contends that because arson and fraud attended the claim, UMC is not entitled to recover under Condition No. 15 of the Insurance Policy.Burden of proof is the duty of any party to present evidence to establish his claim or defense by the amount of evidence required by law,19which is preponderance of evidence in civil cases.20The party, whether plaintiff or defendant, who asserts the affirmative of the issue has the burden of proof to obtain a favorable judgment.21Particularly, in insurance cases, once an insured makes out a prima facie case in its favor, the burden of evidence shifts to the insurer to controvert the insureds prima facie case.22In the present case, UMC established aprima faciecase against CBIC. CBIC does not dispute that UMCs stocks in trade were insured against fire under the Insurance Policy and that the warehouse, where UMCs stocks in trade were stored, was gutted by fire on 3 July 1996, within the duration of the fire insurance. However, since CBIC alleged an excepted risk, then the burden of evidence shifted to CBIC to prove such exception.1wphi1An insurer who seeks to defeat a claim because of an exception or limitation in the policy has the burden of establishing that the loss comes within the purview of the exception or limitation.23If loss is proved apparently within a contract of insurance, the burden is upon the insurer to establish that the loss arose from a cause of loss which is excepted or for which it is not liable, or from a cause which limits its liability.24In the present case, CBIC failed to discharge its primordial burden of establishing that the damage or loss was caused by arson, a limitation in the policy.In prosecutions for arson, proof of the crime charged is complete where the evidence establishes: (1) the corpus delicti, that is, a fire caused by a criminal act; and (2) the identity of the defendants as the one responsible for the crime.25Corpus delicti means the substance of the crime, the fact that a crime has actually been committed.26This is satisfied by proof of the bare occurrence of the fire and of its having been intentionally caused.27In the present case, CBICs evidence did not prove that the fire was intentionally caused by the insured.First,the findings of CBICs witnesses, Cabrera and Lazaro, were based on an investigation conducted more than four months after the fire. The testimonies of Cabrera and Lazaro, as to the boxes doused with kerosene as told to them bybarangayofficials, are hearsay because thebarangayofficials were not presented in court. Cabrera and Lazaro even admitted that they did not conduct a forensic investigation of the warehouse nor did they file a case for arson.28Second,the Sworn Statement of Formal Claim submitted by UMC, through CRM, states that the cause of the fire was"faulty electrical wiring/accidental in nature."CBIC is bound by this evidence because in its Answer, it admitted that it designated CRM to evaluate UMCs loss.Third,the Certification by the Bureau of Fire Protection states that the fire was accidental in origin. This Certification enjoys the presumption of regularity, which CBIC failed to rebut.Contrary to UMCs allegation, CBICs failure to prove arson does not mean that it also failed to prove fraud.Qua Chee Gan v. Law Union29does not apply in the present case. InQua Chee Gan,30the Court dismissed the allegation of fraud based on the dismissal of the arson case against the insured, because the evidence was identical in both cases, thus:While the acquittal of the insured in the arson case is not res judicata on the present civil action, the insurers evidence, to judge from the decision in the criminal case, is practically identical in both cases and must lead to the same result, since the proof to establish the defense of connivance at the fire in order to defraud the insurer "cannot be materially less convincing than that required in order to convict the insured of the crime of arson" (Bachrach vs. British American Assurance Co., 17 Phil. 536).31In the present case, arson and fraud are two separate grounds based on two different sets of evidence, either of which can void the insurance claim of UMC. The absence of one does not necessarily result in the absence of theother. Thus, on the allegation of fraud, we affirm the findings of the Court of Appeals.Condition No. 15 of the Insurance Policy provides that all the benefits under the policy shall be forfeited, if the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, to wit:15. If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting in his behalf to obtain any benefit under this Policy; or if the loss or damage be occasioned by the willful act, or with the connivance of the Insured, all the benefits under this Policy shall be forfeited.InUy Hu & Co. v. The Prudential Assurance Co., Ltd.,32the Court held that where a fire insurance policy provides that "if the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under this Policy," and the evidence is conclusive that the proof of claim which the insured submitted was false and fraudulent both as to the kind, quality and amount of the goods and their value destroyed by the fire, such a proof of claim is a bar against the insured from recovering on the policy even for the amount of his actual loss.In the present case, as proof of its loss of stocks in trade amounting toP50,000,000.00, UMC submitted its Sworn Statement of Formal Claim together with the following documents: (1) letters of credit and invoices for raw materials, Christmas lights and cartons purchased; (2) charges for assembling the Christmas lights; and (3) delivery receipts of the raw materials. However, the charges for assembling the Christmas lights and delivery receipts could not support its insurance claim. The Insurance Policy provides that CBIC agreed to insure UMCs stocks in trade. UMC defined stock in trade astangible personal property kept for sale or traffic.33Applying UMCs definition, only the letters of credit and invoices for raw materials, Christmas lights and cartons may be considered.The invoices, however, cannot be taken as genuine. The invoices reveal that the stocks in trade purchased for 1996 amounts toP20,000,000.00 which were purchased in one month. Thus, UMC needs to prove purchases amounting toP30,000,000.00 worth of stocks in trade for 1995