Facts: On August 18, 1932, the defendant issued an insurance policy on the life of Jaime McGuire for the

sum of $5,000, and an additional sum of $5,000 as double indemnity accident benefit, payable to the plaintiff as beneficiary. The insured paid the premiums on said policy up to and including that due on July 19, 1940. On June 22, 1940, the insured secured from the defendant a loan of $760 on said insurance policy. The insured failed to pay the loan with the interest when it became due; he likewise failed to pay the premiums which fell due on July 19, 1941. As such, when the insured Jaime McGuire died on August 4, 1943, in a motorcycle accident at Borongan, Samar, Philippines, the policy was already carried on under a nonforfeiture clause of the policy up to and includng March 1, 1942. However, the date of the said policy has already lapsed, and McGuire failed to reinstate the said policy before the fateful date of his death due to the then existence of war and the occupation of the Philippines by enemy forces from January 1, 1942, to February, 1945. Hence the trial court rendered judgment in favor of the plaintiff, adjudging the defendant to pay McGuire the sum of P20,000, minus the premiums due and unpaid up to the date of the death of the insured, with legal interest thereon from the date of the filing of the complaint, and the costs. Issue: WON the non-payment of premium during the period of war is a valid ground to suspend the obligation of the insured to pay the premiums due. Ruling: No. The trial courts judgment is erroneous. According to the complaint, plaintiff's theory is that, although the policy lapsed on March 1, 1942, the insured had the privilege of reinstating it so as to keep it in force up to the time of his death upon a written application within three years from the date of lapse and upon production of evidence of insurability, but that the insured was unable to exercise that privilege because of the war. The trial court held that it was unnecessary for the plaintiff to invoke the reinstatement clause of the policy because it had not lapsed inasmuch as the failure to pay the premiums was due to the war. The Supreme Court adopted the United States rule which declares that the contract is not merely suspended, but is abrogated by reason of nonpayment of premiums, since the time of the payments is peculiarly of the essence of the contract. The incontestability of the insurance policy is rebutted by the defense of nonpayment of premium. Thus the fundamental character of the undertaking to pay premiums and high importance of the defense of nonpayment thereof was specifically recognized regardless of the existence of war.