Colado v. Insular Life - Tender of Overdue Payments

51 OG (No 12) 6269

Facts:

>  Vivencio Collado applied for an insurance contract with Insular life in 1948.  His application was approved and he began started making premium payments.  However, he defaulted and the insurance was cancelled.

>  He then applied for the reinstatement of his insurance policy in Nov. of 1951 and tendered the amount of premium for the years 1950-1951.

>  He stated that he was as of Nov. 1951 of good health, and that he had no injuries, ailments or illnesses and had not been sick for any case since 1948 (his medical check up when he applied for insurance) and that he had not consulted any physician or practitioner for any case since the date of such latest medical exam.

>  However, when Vivencio applied for the reinstatement, he was already sick of a fatal disease known as carcinoma of the liver and that 4 days prior to his application for insurance, he consulted a doctor regarding his condition.

>  The reinstatement was approved.  Vivencio again failed to pay the premiums for the last quarter of Nov. 1951 and as such, Insular life sent him a notice canceling the policy.

>  Vivencio then died.  The beneificiaries instituted the present action to recover from Insular life the death benefits of a life insurance policy valued at 2T.   Insular refused to pay claiming concealment on the part of Vivencio.

>  Collado contends that Insular life had waived the right to rescine the policy in view of its repeated acceptance of the overdue premiums for the second and third years.

>  Municipal court of Manila found for Collado and Insular filed an appeal with CFI of Manila. CFI rendered judgment in favor of Insular and dismissed Collado’s complaint.

Issue:

Whether or nor Insular life was estopped and could no longer cancel the contract due to the fact that it accepted the tender of overdue payments from Vivencio.

Held:

NO.

It is enormously clear that  when the deceased applied for a reinstatement of his policy in Nov. 1951, he had already been afflicted with the fatal ailment for a period of about four months.  Furthermore, in submitting together with his application for reinstatement, a health statement to the effect that he was in good health, Vivencio concealed the material fact that he had consulted a doctor and was then found to be afflicted with the malady.

The acceptance of Insular life of the overdue premiums did not necessarily deprive it of the right to cancel the policy in case of default incurred by the Insured in the payment of future premiums.  The case would be different had the insured died at any time after the payment of overdue premiums but previous to the reinstatement of the policy, for the, Insular, by its acceptance of its overdue premiums is deemed to have waived its right to rescind the policy.

The evidence at hand shows that insofar as the payment of the last quarterly premium for 1951 was concerned, Insular had availed of the right to rescind the policy by notifying the Insured that the policy had lapsed.