Edillon v. Manila Bankers Life Insurance Corporation
REITERATIONFacts
1. The Antecedents: Carmen O. Lapuz applied for accident and injury insurance coverage with Manila Bankers Life Insurance Corporation in April 1969. She provided her date of birth as July 11, 1904, making her nearly 65 years old at the time. She paid the premium and was issued Certificate of Insurance No. 128866, effective for 90 days. Tragically, Carmen O. Lapuz died in a vehicular accident on May 31, 1969, within the policy's coverage period. 2. Procedural History: The named beneficiary, Regina L. Edillon, filed a claim for the insurance proceeds, which was denied by Manila Bankers Life Insurance Corporation. Edillon subsequently filed a complaint in the Court of First Instance of Rizal, Branch V, Quezon City. The trial court ruled in favor of the insurance corporation, dismissing the complaint and ordering the return of the premium. Edillon then appealed this decision directly to the Supreme Court. 3. The Petition: The appeal to the Supreme Court centers on the legal question of whether the insurance corporation's acceptance of the premium and issuance of the certificate of insurance, despite the insured being over the age of 60 (an exclusionary condition), constitutes a waiver of that condition. Petitioners-appellants argue that the insurer, having been fully aware of the insured's age at the time of application and issuance, is estopped from later denying coverage based on the overage exclusion. They contend that the insurer's failure to cancel the policy within the 45 days between application and death, despite having sufficient time to review the application, implies a waiver of the exclusionary clause.
Issue(s)
Whether the acceptance by the insurance corporation of the premium and the issuance of the certificate of insurance, with full knowledge of the insured's age, constitutes a waiver of the exclusionary condition of overage.
Ruling
The Supreme Court reversed the judgment of the trial court. It ordered the respondent insurance corporation to pay the petitioner the sum of P10,000.00 as proceeds of the insurance, with legal interest from May 31, 1969, until fully paid, plus P2,000.00 for attorney's fees and costs.
Ratio Decidendi
On Issue 1: The Supreme Court held that the insurance corporation is deemed in estoppel. The age of the insured was not concealed; the printed application form clearly indicated she was nearly 65 years old, a fact that was material and prominent. Despite this information, the insurer received the premium and issued the certificate without question. The Court noted that the accident occurred 45 days after the application, providing the insurer sufficient time to process the form and cancel the policy had it intended to enforce the exclusion. By failing to act, the insurer either waived the disqualification or was grossly negligent through its employees. Citing Que Chee Gan vs. Law Union Insurance Co., Ltd., the Court emphasized that allowing a company to accept money for a policy it knows to be void is abhorrent to fair-minded men and closely related to fraud. The law assumes the insurer intends to execute a valid contract, and any inconsistency known at the time of issuance is presumed waived to prevent the company from treating the policy as valid only long enough to collect the premium.
Main Doctrine
An insurance corporation is deemed in estoppel and has waived an exclusionary condition in a policy if it accepts premium payments and issues a certificate of insurance despite knowledge of facts that would invalidate the policy, failing to act on such disqualification within a reasonable time.