G.R. No. L-34200 September 30, 1982 Vasquez, J.

REGINA L. EDILLON, AS ASSISTED BY HER HUSBAND, MARCIAL EDILLON,

v. MANILA BANKERS LIFE INSURANCE CORPORATION and CFI RIZAL


In April 1969, Carmen Lapuz applied with Manila Bankers for insurance coverage
against accident and injuries. In the application form, she indicated her birthdate
as July 11, 1904. She paid P20.00 representing the premium for which she was
issued the corresponding receipt. Manila Bankers issued her a policy effective for
a period of 90 days. The named beneficiary was her sister Regina (petitioner).
On May 31, 1969 (during the effectivity of the policy), Carmen died in a vehicular
accident in the North Diversion Road. On June 7, Regina filed her claim for the
proceeds of the insurance. Manila Bankers refused, relying on a provision
contained in the Certificate of Insurance which excluded its liability to pay claims
in behalf of persons who are under sixteen or over sixty. Because Carmen was
over 60 years old when she applied for the insurance coverage, the policy was
null and void, and no risk ever arose on the part of Manila Bankers.
Regina filed an action before the CFI Rizal, which dismissed the complaint.


W/N Manila Bankers' acceptance of the premium and issuance of the certificate of
insurance should be deemed a waiver of the exclusionary condition ! YES

Carmen's age was not concealed to the insurance company. It was clearly
indicated on her application form. Still, Manila Bankers received her payment and issued
the corresponding certificate of insurance without question. Between the submission of
her application and the occurrence of the accident, there was sufficient time (45 days)
for the company to process the application and cancel the policy on the ground that she
was over 60 years old. If the company failed to act, it is either because it was willing to
waive the disqualification or through its own negligence or incompetence, it overlooked
the fact. Under the circumstances, Manila Bankers is already deemed in estoppel.
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 (Am. Jur.). The plain, human justice of this doctrine is
perfectly apparent. To allow a company to accept one's money for a policy of insurance
which it then knows to be void and of no effect, though it knows as it must, that the
assured believes it to be valid and binding, is so contrary to the dictates of honesty and
fair dealing, and so closely related to positive fraud, as to be abhorrent to fair-minded
men. It would be to allow the company to treat the policy as valid long enough to get the
premium on it, and leave it at liberty to repudiate it the next moment.
WHEREFORE, the judgment appealed from is hereby REVERSED and SET
ASIDE. In lieu thereof, Manila Bankers is ordered to pay P10,000 as proceeds of the
policy with legal interest, plus attorney's fees and the costs of suit.


Bianca Danica Santiago Villarama