G.R. No. 183526 Case Digest

G.R. No. 183526, August 25, 2009

Violeta Lalican

vs The Insular Life Insurance Company

Ponente: Chico-Nazario

Facts:

Violeta is the widow of the Eulogio Lalican. During his lifetime, Eulogio applied for an insurance policy with Insular Life on April 24, 1997 which contained a 20-year endowment variable income package flexi plan worth P500k with two riders worth P500k each. Violeta was named the primary beneficiary.

Under the terms, Eulogio was to pay premiums on a quarterly basin in the amount of P8,062  with 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, however he failed to pay the premium due on January 24, 1998, even after the lapse of the grace period of 31 days. Therefore, lapsed and become void. Eulogio submitted to the Cabanatuan District Office of Insular Life an application for reinstatement together with the payment of the premium due on January 24. Insular Life notified Eulogio that his application for reinstatement could not be fully processed because of the unpaid interest thereon. Eulogio was likewise advised by Malaluan (insurance agent) to pay the premiums that subsequently became due April 1998 and July 1998, plus interest.

September 17, 1998. Eulogio went to Malaluan's house and paid for the interest which was received by Malaluan's husband. Later that day, Eulogio died. Without the knowledge of Eulogio's death, Malaluan forwarded to the Insular Life the application for reinstatement and the payment made by Eulogio. However, Insular Life did not act upon such reinstatement for they knew already of Eulogio's death.

September 28, 1998, Violeta filed for the insurance claim. Insular Life then informed Violeta in a letter that her claim could not be processed because the insurance policy had lapsed already and that Eulogio failed to reinstate the same and the payment made done thru Malaluan's husband was, under the insurance policy, was considered a deposit only until approval of the said application. Enclosed to this letter was a check representing the full refund of the past payments made by Eulogio, amounting to P25,417.

Violeta requested for a reconsideration of her claim and returned the check to Insular Life. Insular Life agreed to conduct a re-evaluation of Violeta's claim. Without waiting for the result of the re-evaluation, Violeta filed with the RTC a complaint for death claim benefit alleging the Insular Life was engaged in unfair claim settlement practice and deliberately failed to act with reasonable promptness on her insurance claim. Violeta claims for the P1.5M insurance, plus interest, attorney's fees and cost of suit.

Insular Life filed with the RTC an answer with counterclaim saying that the insurance claim was rendered void due to non-payment of the premium and countered that Violeta should be ordered to pay attorney's fees and expenses of litigation incurred by Insular Life.

RTC declared that Violeta failed to establish by preponderance of evidence her cause of action against the defendant. Violeta failed to establish that the receipt of payment by Malaluan amounted to the reinstatement of the insurance policy. Violeta filed for motion for reconsideration but was denied as well; hence she elevated her case for review on Certiorari.

Issues: (a) Whether the decision of the court can still be reviewed despite having allegedly attained finality and despite the mode of appeal of Violeta erroneous. (b) Whether the RTC has decided the case on a question of law not in accord with law and applicable decisions of the Supreme Court.

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 wasn’t.