Violeta R. Lalican v. Insular Life Assurance Co. Ltd. Facts: Eulogio Lalican applied for an insurance i nsurance 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 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 Malaluans house a second application for reinstatement 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 Malaluans 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 cardio-respiratory arrest secondary to electrocution. electrocution. Violeta, Eulogios 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 Eulogios death, his policy has already lapsed l apsed and he failed to reinstate the same. Violeta requested a reconsideration 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: To reinstate a policy means to restore the same to preium-paying status after it has been permitted to lapse. Both the policy contract and application for reinstatement reinstatement provide for specific conditions for the reinstatement of a lapsed policy. According to the Application for Reinstatement, the policy would only be considered reinstated reinstated upon the approval of the application by Insular Life during the applicants applicants lifetime and good health
and whatever amount the application paid in connection was considered to be a deposit only until approval of said application. Eulogios death rendered impossible full compliance with the conditions for reinstatement of policy even though, before his death, he managed to file his application for reinstatement and deposit the amount for payment of his overdue premiums and interest thereon with Malaluan. As expressly provided on the policy contract, agents of Insular Life have no authority to approve any application for reinstatement. They still had to turn over to Insular Life the application for reinstatement and accompanying deposit, for processing and approval of the latter.
