G.R. No. L-1669; August 31, 1950
PAZ LOPEZ DE CONSTANTINO, plaintiff-appellant, vs. ASIA LIFE INSURANCE COMPANY, defendant-appellee.

G.R. No. L-1670; August 31, 1950
AGUSTINA PERALTA, plaintiff-appellant, vs. ASIA LIFE INSURANCE COMPANY, defendant-appellee.

FACTS

Two consolidated cases involve claims by beneficiaries under life insurance policies issued by Asia Life Insurance Company. In the first case, the insured, Arcadio Constantino, paid only the first annual premium. The policy lapsed due to non-payment of subsequent premiums, and he died in 1944. In the second case, the insured spouses paid premiums until 1941, but the policy lapsed after its cash surrender value was exhausted in 1942 due to non-payment, and the insured Tomas Ruiz died in 1945. In both instances, the non-payment of premiums occurred during the Japanese occupation of Manila when the insurer’s office was closed, and dealings between the parties were impossible and illegal. The beneficiaries sued, arguing that the war excused the premium payments. The trial court ruled in favor of the insurer.

ISSUE

Whether the beneficiaries may recover the insurance proceeds despite the non-payment of premiums caused by the war.

RULING

No. The Supreme Court affirmed the trial court’s decision, absolving the insurer from liability. The Court held that the express terms of the insurance policies required premium payments in advance and stipulated that any unpunctuality would cause the policy to lapse. Non-payment of premiums is a fundamental defense for insurers, as recognized by the Insurance Act. The war did not excuse the non-payment or automatically extend the policies. The Court adopted the prevailing U.S. rule that the contract is suspended during the war where intercourse is illegal, but premiums remain unpaid, and the policy does not revive automatically upon the insured’s death during that period. Since the policies had lapsed prior to the deaths of the insureds, the beneficiaries were not entitled to the proceeds.

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