Eternal Gardens Memorial Park

Corporation
v
Philamlife
(Insurance)

(2) CA : in favor of Philamlife. there being no

application form, Chuang was not covered by
Philamlife's insurance.

ISSUE:
May the inaction of the insurer on the insurance
ETERNAL
GARDENS
MEMORIAL
PARK application be considered as approval of the
CORPORATION, petitioner, vs. THE PHILIPPINE application?
AMERICAN LIFE INSURANCE COMPANY, respondent.
RULING:
FACTS:
YES
Philamlife) entered into an agreement denominated
as Creditor Group Life Policy No. P-19202 with As earlier stated, Philamlife and Eternal entered into
petitioner
Eternal
Gardens
Memorial
Park an agreement denominated as Creditor Group Life
Corporation (Eternal). Under the policy, the clients Policy No. P-1920 dated December 10, 1980. In the
of Eternal who purchased burial lots from it on policy, it is provided that:
installment basis would be insured by Philamlife.
The amount of insurance coverage depended upon EFFECTIVE DATE OF BENEFIT.
the existing balance of the purchased burial lots.
The insurance of any eligible Lot Purchaser shall be
Eternal was required under the policy to submit to effective on the date he contracts a loan with the
Philamlife a list of all new lot purchasers, together Assured. However, there shall be no insurance if the
with a copy of the application of each purchaser, and application of the Lot Purchaser is not approved by
the amounts of the respective unpaid balances of all the Company.
insured lot purchasers. In relation to the instant
petition, Eternal complied by submitting a letter An examination of the above provision would show
dated December 29, 1982,4 containing a list of ambiguity between its two sentences. The first
insurable balances of its lot buyers for October sentence appears to state that the insurance
1982. One of those included in the list as "new coverage of the clients of Eternal already became
business" was a certain John Chuang. His balance of effective upon contracting a loan with Eternal while
payments was PhP 100,000. On August 2, 1984, the second sentence appears to require Philamlife to
approve the insurance contract before the same can
Chuang died.
become effective.
Eternal sent a letter dated August 20, 19845 to
Philamlife, which served as an insurance claim for It must be remembered that an insurance contract
is a contract of adhesion which must be construed
Chuang's death.
After more than a year, Philamlife had not furnished liberally in favor of the insured and strictly against
Eternal with any reply to the latter's insurance the insurer in order to safeguard the latter's
claim. This prompted Eternal to demand from interest.
Philamlife the payment of the claim for PhP 100,000
The fact of the matter is, the letter dated December
on April 25, 1986.8
29, 1982, which Philamlife stamped as received,
In response to Eternal's demand, Philamlife denied states that the insurance forms for the attached list
Eternal's insurance claim in a letter dated May 20, of burial lot buyers were attached to the letter. Such
1986. Consequently, Eternal filed a case before the stamp of receipt has the effect of acknowledging
receipt of the letter together with the attachments.
Makati City Regional Trial Court (RTC).
Such receipt is an admission by Philamlife against
its own interest.13 The burden of evidence has
DECISION OF LOWER COURTS:
(1) RTC : in favor of Eternal. due to Philamlife's shifted to Philamlife, which must prove that the
did
not
contain
Chuang's
insurance
inaction from the submission of the requirements of letter
the group insurance on December 29, 1982 to application. However, Philamlife failed to do so;
Chuang's death on August 2, 1984, as well as thus, Philamlife is deemed to have received
Philamlife's acceptance of the premiums during the Chuang's insurance application.
same period, Philamlife was deemed to have
approved Chuang's application. The RTC said that the seemingly conflicting provisions must be
since the contract is a group life insurance, once harmonized to mean that upon a party's purchase of
a memorial lot on installment from Eternal, an
proof of death is submitted, payment must follow.
insurance contract covering the lot purchaser is
G.R. No. 166245

April 9, 2008

created and the same is effective, valid, and binding

until terminated by Philamlife by disapproving the
insurance application. The second sentence of
Creditor Group Life Policy No. P-1920 on the
Effective Date of Benefit is in the nature of a
resolutory condition which would lead to the
cessation of the insurance contract. Moreover, the
mere inaction of the insurer on the insurance
application must not work to prejudice the insured;
it cannot be interpreted as a termination of the
insurance contract. The termination of the insurance
contract by the insurer must be explicit and
unambiguous.
Interpretation of insurance contracts
VIOLETA LALICAN vs. THE INSULAR LIFE
ASSURANCE COMPANY LIMITED
G.R. No. 183526, August 25, 2009, 597 SCRA
159
FACTS:
Eulogio, the husband of herein petitioner, applied for
an insurance policy the value of which is
P1,500,000.00. Under the policy terms, Eulogio is
obliged to pay the premiums on a quarterly basis,
until the end of the 20-year period of the policy. It
was likewise stated therein that the insured has 31day grace period for the payment of each premium
subsequent to the first and that default in any
payment of said premiums shall result in the
automatic lapse of the said policy. Eulogio failed to
pay a premium even after the lapse of the 31-day
grace period. Hence, the policy lapsed and became
void. He filed an Application for Reinstatement of
said policy and paying the amount of the premium
due. However, Insular Life notified him that they
could not fully process his application because the
amount he paid is inadequate to cover the accrued
interests. Hence, he again applied for the
reinstatement of said policy this time, together with
the required amount. The husband of the insurance
agent was the one who received his application
because the agent was away at that time. Within
the same day, the insured died. This fact was
unknown to the agent who then submitted Eulogios
application for reinstatement to the Insular Life
Regional Office.
Violeta then filed a claim for payment of the full
proceeds of the policy. However, the company said
that she is not entitled to the insurance proceeds
because they claimed that the policy was not
reinstated during her husbands lifetime and good
health.
ISSUE:
Whether or not Eulogio was able to reinstate the
lapsed insurance policy before his death

HELD:
NO. The Court agrees with the RTC that the
conditions for reinstatement under the Policy
Contract and Application for Reinstatement were
written in clear and simple language, which could
not admit of any meaning or interpretation other
than those that they so obviously embody. Violeta
did not adduce any evidence that Eulogio might
have failed to fully understand the import and
meaning of the provisions of his Policy Contract
and/or Application for Reinstatement both of which
he voluntarily signed. While it is a cardinal principle
of insurance law that a policy or contract of
insurance is to be construed liberally in favor of the
insured and strictly as against the insurer company,
yet, contracts of insurance, like other contracts are
to be construed according to the sense and meaning
of the terms, which the parties themselves have
used, if such terms are clear and unambiguous, they
must be taken and understood in their plain,
ordinary and popular sense.
WHEREFORE, premises considered, the Court
DENIES the instant Petition for Review on Certiorari
under Rule 45 of the Rules of Court. The Court
AFFIRMS the Orders dated 10 April 2008 and 3 July
2008 of the RTC of Gapan City, Branch 34, in Civil
Case No. 2177, denying petitioner Violeta R.
Lalicans Notice of Appeal, on the ground that the
Decision dated 30 August 2007 subject thereof, was
already final and executor. No costs.