ANDRES v CROWN LIFE INSURANCE

FACTS:
 On June 1951, Andres presented his death claim as survivor-beneficiary of his wife
who died on May 1951.
 Payment was denied by Crown Life. So, this case was instituted.
 Crown Life disclaim liability saying that the policy already lapsed.
 The Judge absolved Crown Life from liability on the ground that the policy having
lapsed, it was not reinstated at the time his wife died.

ISSUE:
WON the policy has been validly and completely reinstated before the death of his wife

HELD:
Original policy lapsed for non-payment of premiums on December 26,1950, upon
expiration of the customary 31-day period of grace. The conditions set forth in the policy
for reinstatement are the following:
(a) application shall be made within three years from the date of lapse;
(b) there should be a production of evidence of the good health of the insured:
(c) if the rate of premium depends upon the age of the Beneficiary, there should likewise
be a production of evidence of his or her good health;
(d) there should be presented such other evidence of insurability at the date of application
for reinstatement;
(e) there should be no change which has taken place in such good health and insurability
subsequent to the date of such application and before the policy is reinstated; and
(f) all overdue premiums and other indebtedness in respect of the policy, together with
interest at six per cent, compounded annually, should first be paid.
Andres did not comply with the last condition for he only paid P100 (overdue
premium) and despite reminders he remitted the balance 2 days after his wife died.
Based on that, Crown Life had the right to treat the contract as lapsed and refuse payment
of the policy.
Andres contends Crown Life waived the payment thru its letters. Nothing in there indicates
an intention to waive the full payment, considering that a waiver must be clear and
positive.
In other letters, Clearly the Company did not consider the partial payment as sufficient
consideration for the reinstatement.
The stipulation in a life insurance policy giving the insured the privilege to reinstate it upon
written application does not give the insured absolute right to such reinstatement by the
mere filing of an application. The insurer has the right to deny the reinstatement if it is not
satisfied as to the insurability of the insured and if the latter does not pay all overdue
premiums and all other indebtedness to the Company. After the death of the insured, the
insurance Company cannot be compelled to entertain for reinstatement of the policy
because the conditions precedent to reinstatement can no longer be determined and
satisfied (James McGuire vs. The Manufacturer's Life Insurance Co., 48 Off. Gaz. (1),
114).
PEREZ v CA
A contract of insurance, like all other contracts, must be assented to by both parties, either
in person or through their agents and so long as an application for insurance has not been
either accepted or rejected, it is merely a proposal or an offer to make a contract.
FACTS:
 Perez had been insured by BF Lifeman since 1980 for 20k. He was convinced to
increase it to 50k to avail a promotional discount.
 Delay took place in processing the application form. Perez died in an accident.
 At the time of his death, application for the increased covergae were still in the
provincial office. Without knowing that Perez died, BF Lifeman approved the
application form and issued the policy a few days after his death.
 His widow claimed the benefits. She was paid under thee 1st policy but was
refused of the increased coverage.
 Lifeman maintained that the insurance had not been perfected at the time of death.
Lifeman filed for rescission of contract.
 Meanwhile the widow filed a counterclaim for collection of the increased policy.
Trial Court ruled in her favor. CA reversed saying that the insurance contract was
not perfected since at the time the policy was issued, Insured is already dead and
that the contract had to be assented to by both parties and so long as the
applicaton for insurance has not been either accepted or rejected, it is merely an
offer or proposal to make a contract.
 Perez contends that there was a consummated contract of insurance between the
deceased and BF Lifeman Insurance Corporation and that the condition that the
policy issued by the corporation be delivered and received by the applicant in good
health, is potestative, being dependent upon the will of the insurance company,
and is therefore null and void.

ISSUE:
WON there was a consummated contract of insurance

HELD:
NO.
Consent must be manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and
the acceptance absolute.
The perfection of the contract of insurance between the deceased and respondent
corporation was further conditioned upon compliance with the following requisites stated
in the application form: "there shall be no contract of insurance unless and until a policy
is issued on this application and that the said policy shall not take effect until the premium
has been paid and the policy delivered to and accepted by me/us in person while I/We,
am/are in good health."
Under the abovementioned provision, it is only when the applicant pays the premium and
receives and accepts the policy while he is in good health that the contract of insurance
is deemed to have been perfected.
The contract, to be binding from the date of application, must have been a completed
contract, one that leaves nothing to be done, nothing to be completed, nothing to be
passed upon, or determined, before it shall take effect. There can be no contract of
insurance unless the minds of the parties have met in agreement. Also, Lifeman cannot
be held liable for gross negligence. It should be noted that an application is a mere offer
which requires the overt act of the insurer for it to ripen into a contract.

SPS. TIBAY v CA

FACTS:
Fortune Life issued a fire insurance policy in favor of Sps Tibay on their 2 storey
residential building in Makati. The insurance was for 600k covering Jan 23, 1987-1988.
On Jan 23 1987, of the total premium of P2,983.50, Violeta Tibay only paid P600 thus
leaving a considerable balance unpaid.
On March 8 1987, the insured building was completely destroyed by fire. 2 days later, she
paid the balance of the premium. On the same day, she filed a claim on the policy but
was referred to Goodwill (adjuster).
Fortune denied her claim for violation of Policy Condition No. 2 and Sec. 777 of the
Insurance Code. Violeta sued Fortune for damages. Trial Court ruled for Violeta. CA
reversed the decision.
Hence, this petition for review.

ISSUE:
WON Fortune remains liable under the fire insurance policy inspite of failure of Violeta to
pay the premium in full

HELD:
NO.
Insurance is a contract whereby one undertakes for a consideration to indemnify another
against loss, damage or liability arising from an unknown or contingent event. The
consideration is the premium, which must be paid at the time and in the way and manner
specified in the policy, and if not so paid, the policy will lapse and be forfeited by its own
terms.
The Policy provides for payment of premium in full. Accordingly, where the premium has
only been partially paid and the balance paid only after the peril insured against has
occurred, the insurance contract did not take effect and the insured cannot collect at all
on the policy. This is fully supported by Sec. 77 of the Insurance Code which provides —
SEC. 77. An insurer is entitled to payment of the premium as soon as the thing insured is
exposed to the peril insured against. Notwithstanding any agreement to the contrary, no
policy or contract of insurance issued by an insurance company is valid and binding
unless and until the premium thereof has been paid, except in the case of a life or an
industrial life policy whenever the grace period provision applies (Emphasis supplied).