Case Summary (G.R. No. 166245)
Petitioner
Eternal Gardens Memorial Park Corporation, obliged under the group policy to submit lists of lot purchasers with their applications and outstanding balances.
Respondent
Philamlife, which agreed to provide coverage for lot purchasers upon submission and approval of their applications, subject to policy terms.
Key Dates
- December 10, 1980: Inception of Creditor Group Life Policy No. P-1920.
- December 29, 1982: Eternal submitted a transmittal letter (stamped received January 15, 1983) listing “new business,” including Chuang, and indicating enclosed application forms.
- August 2, 1984: Death of John Uy Chuang.
- August 20, 1984: Eternal’s initial claim submission.
- November 15, 1984: Philamlife’s receipt of additional claim requirements.
- May 20, 1986: Philamlife’s formal denial of Chuang’s claim.
- May 29, 1996: Makati RTC decision in favor of Eternal.
- November 26, 2004: Court of Appeals reversal.
- April 9, 2008: Supreme Court decision.
Applicable Law
- 1987 Philippine Constitution (contracts and property rights protected under due process).
- Insurance Code, particularly Section 26, Rule 130 (formal requirements for applications).
- Rule 45, Rules of Court (certiorari jurisdiction).
- Established jurisprudence on adhesion contracts and liberal construction in favor of the insured.
Facts
- Under the policy, coverage for each lot purchaser is equal to the unpaid balance of the lot loan (up to ₱100,000), effective upon contracting the loan if the insurer approves the application.
- Eternal forwarded on December 29, 1982 a list of new lot purchasers, stating that Philamlife application forms and certificates were enclosed; the letter was stamped “received” by Philamlife.
- Chuang died August 2, 1984. Eternal submitted a complete claim dossier, but Philamlife demanded proof of an application executed by the insured. Eternal provided same on November 15, 1984.
- Philamlife denied the claim, arguing no prior approval of Chuang’s application and relying on policy terms requiring formal acceptance.
Issue
Whether Philamlife’s prolonged inaction on Chuang’s submitted application and acceptance of premiums constituted approval of the application, thereby triggering the insurer’s obligation to pay the policy proceeds.
Trial and Intermediate Rulings
- RTC: Found that the stamped receipt admitted the transmittal of Chuang’s application, Philamlife’s inaction and premium acceptance amounted to deemed approval, and rendered judgment for Eternal (₱100,000 plus interest and attorney’s fees).
- CA: Concluded the application was not duly submitted pre-death; ruled that absence of a valid application precluded coverage; reversed the RTC decision.
Supreme Court’s Analysis
- Factual Review: Under recognized exceptions to the conclusive-facts rule, the Court re-examined the CA’s factual findings. The RTC’s credibility assessments and the stamp of receipt were binding unless contradicted by undisputed record evidence. Philamlife failed to rebut the inference that Chuang’s application was enclosed in the December 29, 1982 letter.
- Burden of Proof: The acknowledgment of receipt operates as an admission; once Eternal established that the application was enclosed, the burden shifted to Philamlife to prove non-receipt, which it did not do.
- Credibility: Minor inconsistencies in witness testimony regarding copy numbers did not undermine the essential agreement on material facts.
- Contract Interpretation: Recognizing the group policy as a contract of adhesion, the Court applied the 1987 Constitution’s protection of property and due process rights, and established doctr
Case Syllabus (G.R. No. 166245)
Facts
- On December 10, 1980, Philamlife and Eternal entered into Creditor Group Life Policy No. P-1920, covering all clients of Eternal who purchased burial lots on installment basis.
- Insurance coverage for each lot purchaser equaled the unpaid balance of his loan (including up to two months’ arrears), subject to a P100,000 cap, and was payable to Eternal upon the purchaser’s death.
- Eligibility required: (a) lot purchaser aged 18–65; (b) indebted to Eternal; and (c) acceptance by Philamlife upon its policy effective date.
- Evidence of insurability: no medical exam for amounts ≤ P50,000, but a declaration of good health was required; Philamlife could demand further evidence for amounts > P50,000 or purchasers over 55.
- Effective date clause provided coverage from the date the lot purchaser contracted the loan, “provided the application … is approved by the Company.”
- Eternal was to submit monthly lists of new purchasers, their applications, and account balances to Philamlife.
Chronology of Events
- December 29, 1982: Eternal submitted to Philamlife a transmittal letter listing new lot purchasers for October 1982, including John Uy Chuang (balance P100,000) and “encl.: Phil-Am Life Insurance Application Forms & Cert.”
- August 2, 1984: Chuang died.
- August 20, 1984: Eternal filed a claim with Philamlife, attaching death certificate, citizenship papers, physician’s certificate, claimant’s and assured’s certificates.
- November 12, 1984: Philamlife requested the original application form signed by Chuang and proof of unpaid balance.
- November 15, 1984: Philamlife received the requested documents from Eternal.
- April 25, 1986: Eternal demanded payment of P100,000; Philamlife denied liability on May 20, 1986, citing absence of pre-death approval and app