Short answer. Yes, but only for two years of premium. Article 2242 gives credits of insurers, upon the property insured, for the insurance premium for two years, a preferred claim and encumbrance on that specific immovable, ranked among the other preferences the article lists for specific real property.
What the law says
Credits of insurers, upon the property insured, for the insurance premium for two years
Civil Code, Article 2242 — Preferred Credits on Specific Immovables. Read the full provision →
Where the insurer's claim comes from
Article 2242 lists claims that, with reference to specific immovable property and real rights of the debtor, are preferred and constitute an encumbrance on that particular property. The insurer's claim for unpaid premium is the tenth item on that list, running directly against the property that was insured. This ties the claim to the specific building, not to the debtor's assets generally — it is a preference attached to that immovable in particular, similar in structure to a mortgage credit or a tax claim also listed in the same article.
The preference is capped at two years of premium
The article does not give the insurer an unlimited preferred claim for however much premium accumulated unpaid. It is expressly limited: the preference covers the insurance premium for two years. Premiums that fell due earlier than that two-year window are not carried into this preferred category; the insurer would have to pursue those older amounts as an ordinary, unpreferred claim against the debtor's general estate, standing behind the claims this article and others rank ahead of it.
This claim shares the property with other preferences
Because Article 2242 lists ten different categories of preferred claims on specific immovables — including property taxes, the unpaid price of the property itself, laborers' and contractors' claims for construction or repair, and recorded mortgage credits — the insurer's premium claim does not automatically come first simply by being preferred. Where several of these claims attach to the same building and its value is insufficient to satisfy them all, the order in which the article lists them, together with the specific rules governing concurrence among these preferences, determines how the value of the property is applied among the competing claimants.
Why this preference exists
The rationale is straightforward: insurance on a building protects everyone with a stake in it, including other creditors whose claims are also attached to the same property, because a fire or other insured loss would otherwise wipe out the value they are counting on. Giving the insurer's premium claim a preference on the very property it protected recognizes that the coverage benefited the property and, indirectly, the other claimants against it, even though it was the owner's obligation to pay for it.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Atlantic Erectors, Inc. vs. Herbal Cove Realty Corporation, G.R. No. 148568, March 20, 2003 — read the decision on LawPhil →
- Jan-Dec Construction Corporation vs. Court of Appeals, et al, G.R. No. 146818, February 6, 2006 — read the decision on LawPhil →
- J.L. Bernardo Construction, et al. vs. Court of Appeals, et al, G.R. No. 105827, January 31, 2000 — read the decision on LawPhil →
- Strategic Alliance Development Corporation vs. Radstock Securities Limited and Philippine National Construction corporation, G.R. No. 178158 / G.R. No. 180428, December 4, 2009 — read the decision on LawPhil →