52 – Andres v. Crown Life Insurance Co.

(1958)

FACTS:
 Crown Life Insurance (Crown) issued a life policy in favor of plaintiff and Severa Andres.
 Premiums for the first and second semesters were paid. The premium for the third semester was not paid.
 Crown wrote to Mr. and Mrs. Andres advising them that the policy lapsed on December 25, 1950 and the amount overdue was P165.15,
giving them a period of 60 days from the date of lapse to file an application for reinstatement.
 Subsequently, Crown wrote to Mr. and Mrs. Andres, telling the latter that the life policy was no longer in force and it lapsed on December
25, 1950.
 Plaintiff executed a Statement of Health which is at the same time an Application for Reinstatement of the aforesaid policy. Severa
Andres also executed an Application for Reinstatement.
 Plaintiff wrote a letter to the defendant and enclosed therein a money order for P100, which was received by the defendant
 Crown’s branch secretary wrote plaintiff advising him that the Home Office has approved the reinstatement of the lapsed policy, subject
to the payment of P65.15 due.
 The branch secretary again wrote the plaintiff requesting the remittance of the balance of P65.15 due on the semi-annual premium and
that upon receipt of the said amount, there will be sent to him the Certificate of Reinstatement of the policy.
 Severa died.
 Two days later, plaintiff sent a letter to the defendant and enclosed therewith a Money Order in the amount of P65.00 for the balance
due
 On June 7, 1951, plaintiff presented his Death Claim as survivor-beneficiary of the deceased Severa G. Andres which has been received in
the office of the defendant.
 The insurance company refused to pay due on the ground that the policy has lapsed and was not reinstated at the time the plaintiff's wife
died.

Issue: W/N there was a perfected contract of reinstatement after the policy lapsed due to non-payment of premiums. (NO)

Held:
Where a life insurance policy lapsed, and as compliance with the conditions for reinstatement of the policy, the insured paid only part of the
overdue premium, the failure to pay the balance of the overdue premium prevented the reinstatement said policy and thereafter the recovery
therefrom.

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.

The plaintiff-appellant did not comply with the last condition because he only paid P100 before his wife's death and, despite the Company's
reminders he remitted the balance of P65 two days after his wife died. On the face of such facts, the Company had the right to treat the contract as
lapsed and refuse payment of the policy.

Appellant contends that the condition regarding payment of the premium was waived by the insurance Company by its letters signed by its branch
secretary wherein the Company manifested to appellant that if
he cannot pay the full amount immediately, to send as large an amount as possible and to advise the Company how soon he can expect to be able
to pay the balance. The Court, however, did not see an intention on the insurer's part to waive the full payment of the overdue premium as
prerequisite to the reinstatement of the lapsed policy. There was no clear statement renouncing the insurer's rights. The phrase "working out of an
adjustment most beneficial" to the insured, is so vague and indefinite as to require further negotiations between the parties.