Violeta R. Lalican v. Insular Life Assurance Co. Ltd.

Facts:

Eulogio Lalican applied for an insurance policy with the Insular Life amounting to Php 1,500,000.
Under the terms of the policy, Eulogio was to pay the premiums on a quarterly basis, having a
grace period of 31 days, for the payment of each premium subsequent to the first. If any
premium was not paid on or before the due date, the policy would be in default and if the
premium remained unpaid until the end of the grace period, the policy would automatically
lapse and become void.

Eulogio paid the premiums due on the first two succeeding payment dates but failed to pay
subsequent premiums even after the lapse of the grace period thereby rendering the policy
void. He submitted an application for reinstatement of policy through Josephine Malaluan, an
agent of Insular Life, together with the payment of the unpaid premiums. However, the Insular
Life notified him that his application could not be processed because he failed to pay the
overdue interest of the unpaid premiums.

On Sept. 17, 1998, Eulogio submitted to Malaluan's house a second application for reinstatement
including the payment for the overdue interest as well as for the premiums due for April and July
of that year, which was received by Malaluan's husband on her behalf and was thereby issued
a receipt for the amount Eulogio deposited. However, on that same day, Eulogio died of cardio-
respiratory arrest secondary to electrocution.

Violeta, Eulogio's widow filed with the Insular Life a claim for payment of the full proceeds of the
policy but the latter informed her that the claim could not be granted since at the time of
Eulogio's death, his policy has already lapsed and he failed to reinstate the same. Violeta
requested a reconsideration of her claim but the same was also rejected.

Therefore, she filed a complaint for death claim benefits with the RTC alleging the unfair claim
settlement practice of Insular Life and its deliberate failure to act with reasonable promptness on
her insurance claim. The trial court rendered a decision in favour of Insular Life and after the
former denied her motion for reconsideration, she directly elevated her case to the Supreme
Court via the petition for review on Certiorari.

Issue:

Whether or not the policy of Eulogio was reinstated before his death.

Ruling:

Petition lacks merit.

RTC's decision has long acquired finality for Violeta failed to file a notice of appeal more than
five months after the decision was rendered.

As to the substantial claim of whether there is insurable interest, the Court says that the matter of
insurable interest is entirely irrelevant and the real point of contention herein is whether Eulogio
was able to reinstate the lapsed insurance policy on his life before his death.

The Court rules in the negative, for the insurance policy is clear on the procedure of the
reinstatement of the insurance contract, of which Eulogio has failed to accomplish before his
death. As provided by the policy, insurance shall be deemed reinstated upon the approval of
the insurance policy of the application for reinstatement. The approval should be made during
the lifetime of the insured, in the case at bar, it wasnt.