No. L-34200 – REGINA L. EDILLON, as assisted by her husband, MARCIAL EDILLON, petitioners-appellants, vs. MANILA BANKERS LIFE INSURANCE CORPORATION and the COURT OF FIRST INSTANCE OF RIZAL, BRANCH V, QUEZON CITY, respondents-appellees.
VASQUEZ, J.
Rule Synopsis
The issuance of an insurance contract that contains a condition with knowledge (actual or presumptive) of non-compliance with such condition is deemed waiver of the same.
Facts
Carmen Lapuz had an insurance policy with Manila Bankers Life Insurance Corp, with her sister, Regina Edillon, as beneficiary. Carmen was 65, y.o. at the time of application. She also paid the premiums and the insurer issued the certificate of insurance. This notwithstanding that the exclusionary condition in the policy, i.e. the insurer should not be held liable to pay claims under the policy in behalf of “persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years.” 45 days after said application for insurance, Carmen died in a vehicular accident. Thus, Regina filed a claim with Manila Bankers. The latter refused on the ground that Carmen was already over 60 years old at the time of her application for insurance.
Regina filed an action before the CFI for the recovery of proceeds.
The CFI ruled against Edillon, holding that Manila Bankers was not liable. The CA certified the case to SC. The SC reversed.
Issues
Should the acceptance by Manila Bankers of the premium and the issuance of the corresponding certificate of insurance be deemed a waiver of the exclusionary condition of overage (over 60 y.o.) stated in the certificate of insurance?
Ruling and Discussion
Yes. The acceptance by Manila Bankers of the premium and the issuance of the corresponding certificate of insurance should be deemed a waiver of the exclusionary condition of overage (over 60 y.o.) stated in the certificate of insurance. Manila Bankers is estopped.
Carmen did not conceal her real age. It was clearly indicated that she was 65 y.o. at the time of filing the application for insurance. Such information was prominent and material to the application. Yet, Manila Bankers issued the certificate of insurance without question upon Carmen’s payment of the premium.
As Carmen died 45 days after her application for insurance, Manila Bankers had enough time to process the application and notice that Carmen was over 60 y.o., it could have cancelled the policy but it did not. If Manila Bankers failed to act, it is either because it was willing to waive such disqualification; or, through the negligence or incompetence of its employees for which it has only itself to blame, it simply overlooked such fact. Under the circumstances, the insurance corporation is already deemed in estoppel. Such inaction constitutes waiver of the exclusionary condition.
The SC cited two cases to support its conclusion:
Que Chee Gan vs. Law Union Insurance Co., Ltd.
This case involves a fire insurance policy, which requires, among others, that the bodega insured should have 11 fire hydrants. Yet the insurance policy was issued despite it having only 2. In this case, the SC ruled that there was a waiver of the requirement as to the number of the hydrants, since the insurer, at the time of the issuance of the policy knew of the fact that the bodega in question only had 2 hydrants. It said:
Where the insurer, at the time of the issuance of a policy of insurance, has knowledge of existing facts which, if insisted on, would invalidate the contract from its very inception, such knowledge constitutes a waiver of conditions in the contract inconsistent with the known facts, and the insurer is stopped thereafter from asserting the breach of such conditions.
Capital Insurance & Surety Co., Inc. vs. Plastic Era Co., Inc.
This case involves an insurance policy with a condition that it shall not take effect unless the premium had been paid. The insured executed a promissory as such payment which the insurer accepted. The Court held here, that by acceptance of the promissory note, the insurer is estopped from claiming that the insurance had not yet taken effect. It said: although one of conditions of an insurance policy is that ‘it shall not be valid or binding until the first premium is paid’, if it is silent as to the mode of payment, promissory notes received by the company must be deemed to have been accepted in payment of the premium.
Dispositive
Judgment reversed and set aside.