G.R. No. 166245 – ETERNAL GARDENS MEMORIAL PARK CORPORATION, petitioner, vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, respondent.
VELASCO, JR., J.
Rule Synopsis
The insurer has the burden of proof in showing non-compliance with policy conditions, where it had stamped “received” the required documentary submissions. The insured cannot be prejudiced by the insurer’s lack of action, or by the ambiguous provisions in the policy drafted by the insurer.
Facts
Philamlife entered into an agreement denominated as Creditor Group Life Policy with Eternal Gradens. This insured the latter with respect to buyers of burial lots, 18-65 y.o., on installment. Insurance coverage is based on the outstanding balances of buyers. As required by Philamlife, Eternal Gardens submitted to the former the following: list of lot purchasers, copy of application of each purchaser, outstanding balance of each. One of the lot purchasers, John Huang, died. Thus, Eternal Gardens sent Philamlife a letter as insurance claim. It also submitted other pertinent documents (death certificate, ID, etc.). Philamlife demanded additional requirements which Eternal complied with. However, one year after such submission by Eternal, Philamlife still did not reply. Instead, upon demand by Eternal, Philamlife denied the claim on ground of non-submission of the application.
Eternal Gardens filed a case before the RTC for a sum of money against Philamlife.
The RTC ruled in favor of Eternal. The CA reversed. The SC reversed; Philamlife was liable.
Issues
- Did the evidence support Eternal’s claim that the application for insurance was duly submitted to Philamlife before the death of John Chuang?
- Was there a valid insurance coverage, notwithstanding Philamlife’s lack of approval?
Ruling and Discussion
Procedural Note: the SC said that this case falls under one of the exceptions allowing it to review the factual bases of the decision of the lower courts, namely, that the findings of the CA were contrary to that of the trial court.
- Yes. The evidence supported Eternal’s claim that the application for insurance was duly submitted to Philamlife before the death of John Chuang.
The letter sent by Eternal Gardens to Philamlife stating that the insurance forms for the attached list of burial lot buyers were attached to the letter was stamped “received” by Philamlife. This has the effect of acknowledging the receipt of the letter with its attachments by Philamlife. It was an admission by Philamlife against its own interest. The burden was upon Philamlife to show that the letter did not contain Chuang’s insurance application as an attachment. Philamlife failed to do so.
As to the issue raised by Philamlife that Eternal’s witness lacked credibility, the Court gave scant consideration. It ruled that the allege inconsistencies in the testimony of witnesses for Eternal were minor, and that if anything, it even served to strengthen their credibility as these negate any suspicion that the testimonies have been rehearsed. - Yes. There was a valid insurance coverage, notwithstanding Philamlife’s lack of approval.
The policy indicated the following for the effective date of benefit: The insurance of any eligible Lot Purchaser shall be effective on the date he contracts a loan with the Assured. However, there shall be no insurance if the application of the Lot Purchaser is not approved by the Company.
The seeming ambiguity in the above stated must be resolved against Philamlife. The first sentence appears to state that the insurance coverage of the clients of Eternal already became effective upon contracting a loan with Eternal while the second sentence appears to require Philamlife to approve the insurance contract before the same can become effective. It must be resolved it favor of the effectivity of the contract.
The provisions may be harmonized. upon a party’s purchase of a memorial lot on installment from Eternal, an insurance contract covering the lot purchaser is created and the same is effective, valid, and binding until terminated by Philamlife by disapproving the insurance application. The second sentence must be deemed a resolutory condition. Furthermore, mere inaction of the insurer on the insurance application must not work to prejudice the insured.
Dispositive
Petition granted, judgment reversed and set aside.