CONSTANTINO V.

ASIA LIFE- NON-PAYMENT OF INSURANCE PREMIUMS

Facts:

> Appeal consolidates two cases.

> Asia life insurance Company (ALIC) was incorporated in Delaware.

> For the sum of 175.04 as annual premium duly paid to ALIC, it issued Policy No. 93912 whereby it insured the life of
Arcadio Constantino for 20 years for P3T with Paz Constantino as beneficiary.

• First premium covered the period up to Sept. 26, 1942. No further premiums were paid after the first premium
and Arcadio died on Sept. 22, 1944.

> Due to Jap occupation, ALIC closed its branch office in Manila from Jan. 2 1942-1945.

> On Aug. 1, 1938, ALIC issued Policy no. 78145 covering the lives of Spouses Tomas Ruiz and Agustina Peralta for
the sum of P3T for 20 years. The annual premium stipulated was regularly paid from Aug. 1, 1938 up to and including
Sept. 30, 1940.

• Effective Aug. 1, 1941, the mode of payment was changed from annually to quarterly and such quarterly
premiums were paid until Nov. 18, 1941.

• Last payment covered the period until Jan. 31, 1942.

• Tomas Ruiz died on Feb. 16, 1945 with Agustina Peralta as his beneficiary.

> Due to Jap occupation, it became impossible and illegal for the insured to deal with ALIC. Aside from this the insured
borrowed from the policy P234.00 such that the cash surrender value of the policy was sufficient to maintain the policy in
force only up to Sept. 7, 1942.

> Both policies contained this provision: All premiums are due in advance and any unpunctuality in making such payment
shall cause this policy to lapse unless and except as kept in force by the grace period condition.
> Paz Constantino and Agustina Peralta claim as beneficiaries, that they are entitled to receive the proceeds of the
policies less all sums due for premiums in arrears. They also allege that non-payment of the premiums were caused by
the closing of ALIC’s offices during the war and the impossible circumstances by the war, therefore, they should be
excused and the policies should not be forfeited.

> Lower court ruled in favor of ALIC.

Issue:

May a beneficiary in a life insurance policy recover the amount thereof although the insured died after repeatedly failing
to pay the stipulated premiums, such failure being caused by war?

Held:

NO. Due to the express terms of the policy, non-payment of the premium produces its avoidance. In Glaraga v. Sun Life,
it was held that a life policy was avoided because the premium had not been paid within the time fixed; since by its
express terms, non-payment of any premium when due or within the 31 day grace period ipso fact caused the policy to
lapse.

When the life insurance policy provides that non-payment of premiums will cause its forfeiture, war does NOT excuse
non-payment and does not avoid forfeiture. Essentially, the reason why punctual payments are important is that the
insurer calculates on the basis of the prompt payments. Otherwise, malulugi sila.

It should be noted that the parties contracted not only as to peace time conditions but also as to war-time conditions
since the policies contained provisions applicable expressly to wartime days. The logical inference therefore is that the
parties contemplated the uninterrupted operation of the contract even if armed conflict should ensue.
 PEREZ V. CA - PERFECTION OF THE CONTRACT OF INSURANCE

Facts:

> Primitivo Perez had been insured with the BF Lifeman Insurance Corporation since 1980 for P20,000.00.
> In October 1987, an agent of Lifeman, Rodolfo Lalog, visited Perez in Quezon and convinced him to apply for
additional insurance coverage of P50,000.00, to avail of the ongoing promotional discount of P400.00 if the premium
were paid annually.
> Primitivo B. Perez accomplished an application form for the additional insurance coverage. Virginia A. Perez, his wife,
paid P2,075.00 to Lalog. The receipt issued by Lalog indicated the amount received was a "deposit."
> Unfortunately, Lalog lost the application form accomplished by Perez and so on October 28, 1987, he asked the latter
to fill up another application form. On November 1, 1987, Perez was made to undergo the required medical examination,
which he passed.
> Lalog forwarded the application for additional insurance of Perez, together with all its supporting papers, to the office
of BF Lifeman Insurance Corporationn in Quezon which office was supposed to forward the papers to the Manila office.
> On November 25, 1987, Perez died while he was riding a banca which capsized during a storm.
> At the time of his death, his application papers for the additional insurance were still with the Quezon office. Lalog
testified that when he went to follow up the papers, he found them still in the Quezon office and so he personally brought
the papers to the Manila office of BF Lifeman Insurance Corporation. It was only on November 27, 1987 that said papers
were received in Manila.
> Without knowing that Perez died on November 25, 1987, BF Lifeman Insurance Corporation approved the application
and issued the corresponding policy for the P50,000.00 on December 2, 1987
> Virginia went to Manila to claim the benefits under the insurance policies of the deceased. She was paid P40,000.00
under the first insurance policy for P20,000.00 (double indemnity in case of accident) but the insurance company refused
to pay the claim under the additional policy coverage of P50,000.00, the proceeds of which amount to P150,000.00 in
view of a triple indemnity rider on the insurance policy.
> In its letter of January 29, 1988 to Virginia A. Perez, the insurance company maintained that the insurance for
P50,000.00 had not been perfected at the time of the death of Primitivo Perez. Consequently, the insurance company
refunded the amount of P2,075.00 which Virginia Perez had paid
> Lifeman filed for the rescission and the declaration of nullity. Perez, on the other hand, averred that the deceased had
fulfilled all his prestations under the contract and all the elements of a valid contract are present.
> RTC ruled in favor of Perez. CA reversed.
Issue:

Whether or not there was a perfected additional insurance contract.

Held:

The contract was not perfected.

Insurance is a contract whereby, for a stipulated consideration, one party undertakes to compensate the other for loss on
a specified subject by specified perils. A contract, on the other hand, is a meeting of the minds between two persons
whereby one binds himself, with respect to the other to give something or to render some service.
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. When Primitivo filed an application for
insurance, paid P2,075.00 and submitted the results of his medical examination, his application was subject to the
acceptance of private respondent BF Lifeman Insurance Corporation. 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."
The assent of private respondent BF Lifeman Insurance Corporation therefore was not given when it merely received the
application form and all the requisite supporting papers of the applicant. Its assent was given when it issues a
corresponding policy to the applicant. 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.
It is not disputed, however, that when Primitivo died on November 25, 1987, his application papers for additional
insurance coverage were still with the branch office of respondent corporation in Gumaca and it was only two days later,
or on November 27, 1987, when Lalog personally delivered the application papers to the head office in Manila.
Consequently, there was absolutely no way the acceptance of the application could have been communicated to the
applicant for the latter to accept inasmuch as the applicant at the time was already dead.