G.R. No. L-56718. January 17, 1985.
ACME SHOE RUBBER & PLASTIC CORPORATION, petitioner, vs. THE COURT OF APPEALS and DOMESTIC INSURANCE COMPANY OF THE PHILIPPINES, respondents.

FACTS

Petitioner Acme Shoe Rubber & Plastic Corporation (ACME) had its properties insured with respondent Domestic Insurance Company under a fire insurance policy renewed annually. For the period May 15, 1964 to May 15, 1965, the insurer issued Renewal Receipt No. 30127, which contained a “Receipt of Payment Clause” and a “Credit Agreement” rider. These stipulated that the insurance would be valid only upon full payment of the premium and that a 90-day credit was granted from the policy’s effective date. On May 26, 1964, ACME’s president signed a promissory note, promising to pay the premium of P3,331.26 within ninety days from May 15, 1964, and agreeing that the policy would be automatically cancelled upon failure to pay.
ACME did not pay the premium within the 90-day period, which expired on August 13, 1964. A fire completely destroyed the insured properties on October 13, 1964. The insurer denied ACME’s claim, contending there was no coverage at the time of loss due to non-payment. The Court of First Instance ruled in favor of ACME, but the Court of Appeals reversed, dismissing the suit. ACME filed this petition, arguing, among others, that the insurer unjustly enriched itself by applying ACME’s January 8, 1964 premium payment to the prior policy year (1963-1964) and that Republic Act No. 3540 governed.

ISSUE

Whether the insurer was liable under the fire insurance policy for the loss that occurred on October 13, 1964.

RULING

The Supreme Court sustained the Court of Appeals and held the insurer not liable. The legal logic is clear: no valid insurance contract existed at the time of the fire. By the express terms of the promissory note, which ACME’s president signed, the policy would be automatically cancelled if the premium was not paid within the 90-day credit period ending August 13, 1964. ACME failed to pay despite reminders. Pursuant to Republic Act No. 3540 , specifically Section 72, which mandates that no insurance policy is valid and binding unless the premium is paid, the policy was automatically cancelled for non-payment. Thus, as of October 13, 1964, there was no insurance coverage.
ACME’s argument on unjust enrichment fails. The premium payment it made on January 8, 1964, was correctly applied to the 1963-1964 policy period. The renewal for that period (May 15, 1963 to May 15, 1964) was effected on May 14, 1963, before RA 3540 was approved on June 20, 1963, and implemented on October 1, 1963. Laws have no retroactive effect unless expressly provided. Therefore, the 1963-1964 policy was not void under the new law. The cancelled policy was the 1964-1965 one, due to ACME’s own failure to pay the premium within the agreed credit extension. The Court affirmed the appellate decision dismissing the complaint.