Violeta Lalican vs The Insular Life Insurance Company

G.R. No. 183526

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.