1

TITLE: HELD:
It is true that the policy was originally issued to the insured on January 1,
Collado v Insular Life Assurance Co. 1949; the same had, therefore, been in force for over two years prior to its
(G.R. No. L-25172| May 24, 1974) reinstatement on November 28, 1951. The policy had lapsed upon the
failure of the insured to pay on time.
FACTS: It has been held that a reinstated policy should be viewed as a new
Juana Vda. De Collado is the widow of the deceased Vivencio Collado. contract, and that the period for contestability for reinstatement runs from
The defendant company issued a life policy in favor of Vivencio and the the time of reinstatement
plaintiffs were named as beneficiaries It has been expressly stipulated in the insureds application for
The first annual premiums of the policy were wholly paid by the insured, reinstatement with health statement that:
while the subsequent premiums were paid by the insured on a quarterly o I further agree that if, at any time within two years from the date
basis. However, he defaulted which resulted to the cancellation of the of the approval hereof, any statements herein made shall be
insurance policy. found to be untrue in any respect, the company shall have the
He then, applied for reinstatement of his insurance policy and tendered right to declare null and void and of no effect the issuance or
the amount for the balance and declared that he was in good health and reinstatement of said policy
had not consulted or been attended by a physician since his first medical The Insurance Act grants the insurer the right to rescind the contract of
examination. However, when he applied for reinstatement, he was already insurance before the commencement of an action on the same.
sick. Records disclose that notice of rescission and cancellation of the policy was
The reinstatement was approved and on February 4, 1952, the insured served by the insurer upon the plaintiffs more than one month prior to the
paid the first quarterly premium for said year but three days thereafter, institution of the present action,
the insured died of carcinoma of the liver.
The plaintiffs originally instituted the present action in the Municipal Court JUDGMENT AFFIRMED
to recover from the defendant company the death benefits of a life
insurance policy valued at Php2,000.00.
Plaintiff argued that the policy could not have been cancelled by the
insurance company by reason of non-payment of the premiums. They
argued that although the payment of said premiums was made beyond the
30-day period of grace allowed by the policy, the defendant waived the
rights to rescind the contract by accepting the premiums paid though
belatedly paid
Defendant argued that prior to its acceptance of the payment of premium
Collado already applied for a reinstatement of his lapsed policy and that on
date of his application, the Vivencio averred that he was in good health
and had not consulted or been attended by a physician since his first
medical examination.
The Municipal Court ruled in favor of the plaintiffs but upon appeal, the CFI
ruled in favor of the defendant.
Hence the instant petition

ISSUE/S: Whether or not the insurance company can be held liable to pay plaintiffs.
(NO)