025 Violeta Lalican v Insular Life

Assurance Co. Ltd.

GR No. 183526, August 25, 2009
Topic: Sec. 10-25
Ponente: Chico-Nazario
Author: Keith Meridores
Link:
sc.judiciary.gov.ph/jurisprudence/2009/august2009/183526.htm


FACTS:
1. In 1997, Eulogio Lalican applied for an insurance policy with Insular Life. It was granted that same year to
him.
1.1 the insurance involved a 20-year plan. Payments were to be made every quarter for 20 years.
1.2 the plan holder was alaos given a grace period of 31 days for payments missed.
2. Eulogio failed to pay the premiums due on Jan. of 1998. Despite the grace period, he still fsiled to pay. The
policy thus became void.
3. Eulogio filed an Application for Reinstatement however, Insular Life rejected the application because he
still had a balance due, despite already depositing an amount.
3.1 Insular Life advised him that he deposit the deficit and apply for reinstatement again.
4. In Sept. 17, 1998, Eulogio's wife, Violeta, went to the house of their insurance agent, Malaluan, to give the
second Application for Reinstatement and the amount of 17,500 to cover whatever balance was due. Malaluan
was not in the house when Violeta arrived, so her husband received the Application and the payment.
5. Later that same day, Eulogio died because of Cardiac Arrest and Electrocution.
6. The next day, Malaluan (the insurance agent) forwarded their application to the office of Insular Life.
7. Insular life rejected the application on Sept. 21 because Eulogio was already dead.
8. On Sept. 28, Violeta claimed the insurance from Insular Life. Insular Life obviously rejected.
8.1 reason cited was that, the insurance was not properly reinstated.
8.2 the policy would only be considered reinstated upon approval of the application by Insular Life during the
applicants lifetime and good health,
9. Violeta filed a reconsideration with Insular Life and a demand letter demanding the payout.
9.1 Insular Life promised to reassess.
10. Pending this reassessment, Violeta filed with the RTC a Death Claim Benefit
10.1 answer of Insular Life alleged that there was no proper reinstatement, thus, the policy, as it stands, is
void.
11. RTC: ruled in favor of Insular Life. (The policy had lapsed and there was no reinstatement)
12. Violeta filed and MR with the RTC, but it was denied.
13. Violeta also filed a Notice of Appeal. It was also rejected. (Ground: decision already attained finality)
14. Violeta went to the SC via Petition for Review on Certiorari.

ISSUE:
(Note: before proceeding to the rlevant issue for discussion, the SC pointed out a lot of procedural infirmities
in the case. The SC just discussed the relevant topic assuming they ignored the procedural defects)

Whether or not Eulogio had an exisitng Insurable Interest in his own life until the day of his death?

(The real issue accdg. To the SC is w/n there was a valid reinstatement before the day of the death of Eulogio)

HELD:
Yes. However, this issue is irrelevant in determining if Violeta is entitled to the proceeds. The SC said that
Violeta makes it appear that her present Petition involves a question of law. (That's the only reason why this
issue is being discussed by the SC.)
RATIO:

1. What is an Insurable Interest.

1.1 An insurable interest is one of the most basic and essential requirements in an insurance contract. In
general, an insurable interest is that interest which a person is deemed to have in the subject matter insure.
1.2 ... where he has a relation or connection with or concern in it, such that the person will derive pecuniary
benefit or advantage from the preservation of the subject matter insured and will suffer pecuniary loss or
damage from its destruction, termination, or injury by the happening of the event insured against.

2. What is the importance of having an Insurable Interest

2.1 The existence of an insurable interest gives a person the legal right to insure the subject matter of the
policy of insurance.

3. Relevant Codal provision

Section 10 of the Insurance Code indeed provides that every person has an insurable interest in his own life.
Section 19 of the same code also states that an interest in the life or health of a person insured must exist when
the insurance takes effect, but need not exist thereafter or when the loss occurs.

DOCTRINE
... every person has an insurable interest in his own life. (Insurance Code, Sec. 10)

SEPARATE OPINION:

-none-