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Edillon v Manila Bankers Life Insurance Corporation Vasquez, J.

September 30, 1982 RATIO DECIDENDI: Where the insurer had knowledge of existing facts which would invalidate the policy and accepted premiums and issued a certificate of insurance despite such knowledge, the insurer is estopped thereafter from asserting the nullity of the policy on the ground of breach of its conditions. QUICK FACTS: Carmen Lapuz applied for insurance coverage against accident and injuries with respondent insurance company when she was already above the age of 60. The insurance company received the payment of the premium and issued a receipt and a certificate of insurance despite the provision in the contract which stipulates that persons who are under 16 or above 60 are excluded from coverage. When Lapuz died, her sister filed a claim under said insurance contract. Insurance company denied the claim on the ground that the policy was null and void since Carmen was already above 60 when she applied for the insurance. FACTS: o Carmen Lapuz applied with respondent insurance company for insurance coverage against accident and injuries. o Application was dated April 15, 1969. She gave the date of her birth as July 11, 1904. o She paid the sum of P20 representing the premium for which she was issued the corresponding receipt signed by an authorized agent of the respondent insurance corporation. A Certificate of Insurance was subsequently issued to her. o The policy was effective for 90 days. During the effectivity of the certificate of insurance, Carmen died in a vehicular accident. o Carmens sister, Regina Edillon, filed a claim for the proceeds of the insurance. The claim was denied by the insurance company, relying on a provision contained in the Certificate of Insurance, excluding its liability to pay claims under the policy in behalf of persons who are under 16 and over 60. It argued that Carmen was over 60 when she applied for the insurance. Hence, the policy was null and void. o Trial court ruled in favor of insurance company. The policy was a contract of adhesion. As such, it was the duty of the insured to know the terms of the contract he or she is entering into. The insured in this case, upon learning from the terms of the contract that she could not have been qualified, should have simply asked for a refund of the premium that she paid. ISSUE: WoN the acceptance by the insurance company of the premium and the issuance of the corresponding certificate of insurance should be deemed a waiver of the exclusionary condition of coverage stated in the said certificate of insurance. HELD: Yes. Decision of the trial court is reversed. o The age of Carmen Lapuz was not concealed to the insurance company. Her application clearly indicated that her age as of the time of filing the same to be almost 65 years.

Despite such information which could hardly be overlooked in the application form, considering its prominence and its materiality to the coverage applied for, the respondent issued the corresponding certificate of insurance without question. The accident occurred 45 days after the issuance of the certificate of insurance. There was sufficient time for the insurance company to process the application and to notice that the applicant was over the age of 60 and thereby cancel the policy on that ground if it as minded to do so. Under the circumstances, the insurance company is already deemed in estoppels. Its inaction to revoke the policy despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such condition. Citing Qua Chee Gan: It would be perilously close to conniving at fraud upon the insured to allow appellant (insurance company) to claim not as void ab initio the policies that it had issued to the plaintiff without warning of their fatal defect, of which it was informed, and after it had misled the defendant into believing that the policies were effective. o Reason for the rule: It is contrary to honesty and fair dealing to allow a company to accept ones money for a policy of insurance which it then knows to be void and of no effect though it knows that the assured believes it to be valid and binding.