THIRD
DIVISION
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VIOLETA R. LALICAN, Petitioner, - versus
- THE INSULAR LIFE ASSURANCE COMPANY
LIMITED, AS REPRESENTED BY THE PRESIDENT VICENTE R. AVILON, Respondent. |
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G.R. No. 183526 Present: CARPIO
MORALES,* J., CHICO-NAZARIO,** Acting Chairperson, VELASCO,
JR., NACHURA, and
PERALTA, JJ. Promulgated: August 25, 2009 |
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CHICO-NAZARIO, J.:
Challenged
in this Petition for Review on Certiorari[1]
under Rule 45 of the Rules of Court are the Decision[2]
dated
The
factual and procedural antecedents of the case, as culled from the records, are
as follows:
Violeta is
the widow of the deceased Eulogio C. Lalican (Eulogio).
During his
lifetime, Eulogio applied for an insurance policy with Insular Life. On P500,000.00,[6]
with two riders valued at P500,000.00 each.[7]
Thus, the value of the policy amounted
to P1,500,000.00. Violeta was named as the primary
beneficiary.
Under the
terms of Policy No. 9011992, Eulogio was to pay the premiums on a quarterly
basis in the amount of P8,062.00,
payable every 24 April, 24 July, 24 October and 24 January of each year, until
the end of the 20-year period of the policy.
According to the Policy Contract, there was a grace period of 31 days
for the payment of each premium subsequent to the first. If any premium was not paid on or before the
due date, the policy would be in default, and if the premium remained unpaid
until the end of the grace period, the policy would automatically lapse and
become void.[8]
Eulogio paid the premiums due on
Eulogio submitted to the Cabanatuan
District Office of Insular Life, through Malaluan, on P8,062.00 to pay for the premium due
on P8,062.00 as payment
for the P322.48. Thus, Insular Life instructed Eulogio to pay
the amount of interest and to file another application for reinstatement. Eulogio was likewise advised by Malaluan to
pay the premiums that subsequently became due on
On P17,500.00, representing payments for the
overdue interest on the premium for
A while
later, on the same day,
Without
knowing of Eulogio’s death, Malaluan forwarded to the Insular Life Regional
Office in the City of P17,500.00 deposit.
However, Insular Life no longer acted upon Eulogio’s second Application
for Reinstatement, as the former was informed on
On
In a letter[12]
dated P25,417.00, drawn in Violeta’s
favor, representing the full refund of the payments made by Eulogio on Policy
No. 9011992.
On P25,417.00.
Violeta
returned the letter dated
Without
waiting for the result of the re-evaluation by Insular Life, Violeta filed with
the RTC, on P1,500,000.00, plus interests, attorney’s fees, and cost
of suit.
Insular
Life filed with the RTC an Answer with Counterclaim,[16]
asserting that Violeta’s Complaint had no legal or factual bases. Insular Life maintained that Policy No.
9011992, on which Violeta sought to recover, was rendered void by the
non-payment of the
Violeta, in
her Reply and Answer to Counterclaim, asserted that the requirements for the
reinstatement of Policy No. 9011992 had been complied with and the defenses put
up by Insular Life were purely invented and illusory.
After
trial, the RTC rendered, on
The RTC
found that Policy No. 9011992 had indeed lapsed and Eulogio needed to have the
same reinstated:
[The]
arguments [of Insular Life] are not without basis. When the premiums for April 24 and
The
RTC, taking into account the clear provisions of the Policy Contract between
Eulogio and Insular Life and the Application for Reinstatement Eulogio subsequently
signed and submitted to Insular Life, held that Eulogio was not able to fully
comply with the requirements for the reinstatement of Policy No. 9011992:
The
well-settled rule is that a contract has the force of law between the
parties. In the instant case, the terms
of the insurance contract between [Eulogio] and [Insular Life] were spelled out
in the policy provisions of Insurance Policy No. 9011992. There is likewise no dispute that said
insurance contract is by nature a contract of adhesion[,] which is defined as “one in which one of the contracting parties
imposes a ready-made form of contract which the other party may accept or
reject but cannot modify.” (Polotan, Sr. vs. CA, 296 SCRA 247).
x x x
x
The
New Lexicon Webster’s Dictionary defines ambiguity as the “quality of having
more than one meaning” and “an idea, statement or expression capable of being
understood in more than one sense.” In Nacu vs. Court of Appeals, 231 SCRA 237
(1994), the Supreme Court stated that[:]
“Any ambiguity in a contract, whose terms are
susceptible of different interpretations as a result thereby, must be read and
construed against the party who drafted it on the assumption that it could have
been avoided by the exercise of a little care.”
In the instant case, the dispute arises
from the afore-quoted provisions written on the face of the second application
for reinstatement. Examining the said
provisions, the court finds the same clearly written in terms that are simple
enough to admit of only one interpretation.
They are clearly not ambiguous, equivocal or uncertain that would need
further construction. The same are
written on the very face of the application just above the space where
[Eulogio] signed his name. It is
inconceivable that he signed it without reading and understanding its import.
Similarly,
the provisions of the policy provisions (sic) earlier mentioned are written in
simple and clear layman’s language, rendering it free from any ambiguity that
would require a legal interpretation or construction. Thus, the court believes that [Eulogio] was
well aware that when he filed the said application for reinstatement, his
lapsed policy was not automatically reinstated and that its approval was
subject to certain conditions. Nowhere in the policy or in the application
for reinstatement was it ever mentioned that the payment of premiums would have
the effect of an automatic and immediate renewal of the lapsed policy. Instead, what was clearly stated in the
application for reinstatement is that pending approval thereof, the premiums
paid would be treated as a “deposit only and shall not bind the company until
this application is finally approved during my/our” lifetime and good
health[.]”
Again,
the court finds nothing in the aforesaid provisions that would even suggest an
ambiguity either in the words used or in the manner they were written. [Violeta] did not present any proof that
[Eulogio] was not conversant with the English language. Hence, his having personally signed the
application for reinstatement[,] which consisted only of one page, could only
mean that he has read its contents and that he understood them. x x x
Therefore,
consistent with the above Supreme Court ruling and finding no ambiguity both in
the policy provisions of Policy No. 9011992 and in the application for
reinstatement subject of this case, the court finds no merit in [Violeta’s]
contention that the policy provision stating that [the lapsed policy of
Eulogio] should be reinstated during his lifetime is ambiguous and should be
construed in his favor. It is true that
[Eulogio] submitted his application for reinstatement, together with his
premium and interest payments, to [Insular Life] through its agent Josephine
Malaluan in the morning of
The RTC, in the end,
explained that:
While
the court truly empathizes with the [Violeta] for the loss of her husband, it
cannot express the same by interpreting the insurance agreement in her favor
where there is no need for such interpretation.
It is conceded that [Eulogio’s] payment of overdue premiums and interest
was received by [Insular Life] through its agent Ms. Malaluan. It is also true that [the] application for
reinstatement was filed by [Eulogio] a day before his death. However,
there is nothing that would justify a conclusion that such receipt amounted to
an automatic reinstatement of the policy that has already lapsed. The evidence suggests clearly that no such
automatic renewal was contemplated in the contract between [Eulogio] and
[Insular Life]. Neither was it shown
that Ms. Malaluan was the officer authorized to approve the application for
reinstatement and that her receipt of the documents submitted by [Eulogio]
amounted to its approval.[19] (Emphasis ours.)
The fallo
of the RTC Decision thus reads:
WHEREFORE, all the foregoing premises
considered and finding that [Violeta] has failed to establish by preponderance
of evidence her cause of action against the defendant, let this case be, as it
is hereby DISMISSED.[20]
On
In
the interim, on
On
Violeta
filed with the RTC, on
In
an Order[27] dated
Violeta
directly elevated her case to this Court via
the instant Petition for Review on Certiorari,
raising the following issues for consideration:
1.
Whether or not
the Decision of the court a quo dated
2.
Whether or not
the Regional Trial Court in its original jurisdiction has decided the case on a
question of law not in accord with law and applicable decisions of the Supreme
Court?
Violeta
insists that her former counsel committed an honest mistake in filing a Reply,
instead of a Notice of Appeal of the RTC Decision dated
Violeta further posits that the Court
should address the question of law arising in this case involving the
interpretation of the second sentence of Section 19 of the Insurance Code, which
provides:
Section.
19. x x x [I]nterest in the life or health of a person
insured must exist when the insurance takes effect, but need not exist
thereafter or when the loss occurs.
On the basis thereof, Violeta argues that
Eulogio still had insurable interest in his own life when he reinstated Policy No.
9011992 just before he
passed away on
The Petition
lacks merit.
At the outset, the Court notes that the
elevation of the case to us via the
instant Petition for Review on Certiorari
is not justified. Rule 41, Section 1 of
the Rules of Court,[28]
provides that no appeal may be taken from an order disallowing or dismissing an
appeal. In such a case, the aggrieved
party may file a Petition for Certiorari
under Rule 65 of the Rules of Court.[29]
Furthermore, the RTC Decision dated
Violeta’s claim that her former counsel’s
failure to file the proper remedy within the reglementary period was an honest
mistake, attributable to the latter’s deteriorating health, is
unpersuasive.
Violeta merely made a general averment of her former
counsel’s poor health, lacking relevant details and supporting evidence. By Violeta’s own admission, her former counsel’s
health rapidly deteriorated only by the first
week of July 2008. The events
pertinent to Violeta’s Notice of Appeal took place months before July 2008, i.e., a copy of the RTC Order dated 8
November 2007, denying Violeta’s Motion for Reconsideration of the Decision
dated 30 August 2007, was received on 3
December 2007; and Violeta’s Notice of Appeal was filed on 20 May 2008. There is utter lack of proof to show that Violeta’s
former counsel was already suffering from ill health during these times; or
that the illness of Violeta’s former counsel would have affected his judgment
and competence as a lawyer.
Moreover, the failure of her former
counsel to file a Notice of Appeal within the reglementary period binds Violeta,
which failure the latter cannot now disown on the basis of her bare allegation
and self-serving pronouncement that the former was ill. A client is bound by his counsel’s mistakes
and negligence.[31]
The Court, therefore, finds no
reversible error on the part of the RTC in denying Violeta’s Notice of Appeal for
being filed beyond the reglementary period.
Without an appeal having been timely filed, the RTC Decision dated
A
judgment becomes "final and executory" by operation of law. Finality becomes a fact when the reglementary
period to appeal lapses and no appeal is perfected within such period. As a consequence, no court (not even this
Court) can exercise appellate jurisdiction to review a case or modify a
decision that has become final.[32] When a final judgment is executory, it
becomes immutable and unalterable. It may no longer be modified in any respect
either by the court, which rendered it or even by this Court. The doctrine is founded on considerations of
public policy and sound practice that, at the risk of occasional errors,
judgments must become final at some definite point in time.[33]
The
only recognized exceptions to the doctrine of immutability and unalterability
are the correction of clerical errors, the so-called nunc pro tunc
entries, which cause no prejudice to any party, and void judgments.[34] The instant case does not fall under any of
these exceptions.
Even
if the Court ignores the procedural lapses committed herein, and proceeds to
resolve the substantive issues raised, the Petition must still fail.
Violeta makes it appear that her present
Petition involves a question of law, particularly, whether Eulogio had an
existing insurable interest in his own life until the day of his death.
An
insurable interest is one of the most basic and essential requirements in an
insurance contract. In general, an
insurable interest is that interest which a person is deemed to have in the
subject matter insured, where he has a relation or connection with or concern
in it, such that the person will derive pecuniary benefit or advantage from the
preservation of the subject matter insured and will suffer pecuniary loss or
damage from its destruction, termination, or injury by the happening of the
event insured against.[35] The existence of an insurable interest gives
a person the legal right to insure the subject matter of the policy of
insurance.[36] Section 10 of the Insurance Code indeed provides
that every person has an insurable interest in his own life.[37] Section 19 of the same code also states that
an interest in the life or health of a person insured must exist when the
insurance takes effect, but need not exist thereafter or when the loss occurs.[38]
Upon
more extensive study of the Petition, it becomes evident that the matter of insurable
interest is entirely irrelevant in the case at bar. It is actually beyond question that while Eulogio
was still alive, he had an insurable interest in his own life, which he did insure
under Policy No. 9011992. The real point of
contention herein is whether Eulogio was able to reinstate the lapsed insurance
policy on his life before his death on
The
Court rules in the negative.
Before
proceeding, the Court must correct the erroneous declaration of the RTC in its
That
Policy No. 9011992
had already lapsed is a fact beyond dispute.
Eulogio’s filing of his first Application for Reinstatement with Insular
Life, through Malaluan, on P8,062.00 overdue premium for P322.48 overdue interests thereon. On P17,500.00, to cover payment for the
overdue interest on the premium for
To
reinstate a policy means to restore the same to premium-paying status after it
has been permitted to lapse.[39] Both the Policy Contract and the Application
for Reinstatement provide for specific conditions for the reinstatement of a
lapsed policy.
The Policy Contract
between Eulogio and Insular Life identified the following conditions for
reinstatement should the policy lapse:
10. REINSTATEMENT
You
may reinstate this policy at any time within three years after it lapsed if the
following conditions are met: (1) the policy has not been surrendered for its
cash value or the period of extension as a term insurance has not expired; (2)
evidence of insurability satisfactory to [Insular Life] is furnished; (3)
overdue premiums are paid with compound interest at a rate not exceeding that
which would have been applicable to said premium and indebtedness in the policy
years prior to reinstatement; and (4) indebtedness which existed at the time of
lapsation is paid or renewed.[40]
Additional conditions for
reinstatement of a lapsed policy were stated in the Application for Reinstatement
which Eulogio signed and submitted, to wit:
I/We agree that said Policy shall not be considered reinstated until this application is approved by the
Company during my/our lifetime and good health and until all other Company requirements for the reinstatement of said
Policy are fully satisfied.
I/We further agree that any payment made or to be made in connection with this application
shall be considered as deposit only and shall not bind the Company until this
application is finally approved by the Company during my/our lifetime and good
health. If this application is
disapproved, I/We also agree to accept the refund of all payments made in
connection herewith, without interest, and to surrender the receipts for such
payment.[41] (Emphases ours.)
In
the instant case, Eulogio’s death rendered impossible full compliance with the
conditions for reinstatement of Policy No. 9011992.
True, Eulogio, before his death, managed to file his Application for
Reinstatement and deposit the amount for payment of his overdue premiums and
interests thereon with Malaluan; but Policy No. 9011992 could
only be considered reinstated after the Application for Reinstatement
had been processed and approved by Insular Life during Eulogio’s lifetime and good health.
Relevant
herein is the following pronouncement of the Court in Andres v. The Crown Life Insurance Company,[42]
citing McGuire v. The Manufacturer's Life
Insurance Co.[43]:
“The stipulation in a life insurance
policy giving the insured the privilege to reinstate it upon written
application does not give the insured
absolute right to such reinstatement by the mere filing of an
application. The insurer has the right to deny the reinstatement if it is not
satisfied as to the insurability of the insured and if the latter does not pay
all overdue premium and all other indebtedness to the insurer. After
the death of the insured the insurance Company cannot be compelled to entertain
an application for reinstatement of the policy because the conditions precedent
to reinstatement can no longer be determined and satisfied.” (Emphases ours.)
It
does not matter that when he died, Eulogio’s Application for Reinstatement and
deposits for the overdue premiums and interests were already with Malaluan. Insular Life, through the Policy Contract, expressly
limits the power or authority of its insurance agents, thus:
Our
agents have no authority to make or
modify this contract, to extend the time limit for payment of premiums, to
waive any lapsation, forfeiture or any of our rights or requirements, such
powers being limited to our president, vice-president or persons authorized by
the Board of Trustees and only in writing.[44] (Emphasis ours.)
Malaluan
did not have the authority to approve Eulogio’s Application for
Reinstatement. Malaluan still had to
turn over to Insular Life Eulogio’s Application for Reinstatement and accompanying
deposits, for processing and approval by the latter.
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. A construction in favor of the insured
is not called for, as there is no ambiguity in the said provisions in the first
place. The words thereof are
clear, unequivocal, and simple enough so as to preclude any mistake in the
appreciation of the same.
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.[45]
Eulogio’s death,
just hours after filing his Application for Reinstatement and depositing his
payment for overdue premiums and interests with Malaluan, does not constitute a
special circumstance that can persuade this Court to already consider Policy No. 9011992
reinstated. Said circumstance cannot
override the clear and express provisions of the Policy Contract and
Application for Reinstatement, and operate to remove the prerogative of Insular
Life thereunder to approve or disapprove the Application for Reinstatement. Even though the Court commiserates with
Violeta, as the tragic and fateful turn of events leaves her practically empty-handed,
the Court cannot arbitrarily burden Insular Life with the payment of proceeds
on a lapsed insurance policy. Justice
and fairness must equally apply to all parties to a case. Courts are not permitted to make contracts for
the parties. The function and duty of the courts consist simply in enforcing
and carrying out the contracts actually made.[46]
Policy No. 9011992
remained lapsed and void, not having been reinstated in accordance with the
Policy Contract and Application for Reinstatement before Eulogio’s death. Violeta, therefore, cannot claim any death
benefits from Insular Life on the basis of Policy No. 9011992;
but she is entitled to receive the full refund of the
payments made by Eulogio thereon.
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
SO
ORDERED.
|
|
MINITA V. CHICO-NAZARIOAssociate Justice Acting Chairperson |
WE
CONCUR:
Associate Justice
PRESBITERO J.
VELASCO, JR.
Associate Justice |
ANTONIO EDUARDO B. NACHURA Associate Justice |
|
|
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DIOSDADO M. PERALTAAssociate Justice |
|
ATTESTATION
I attest that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
MINITA V. CHICO-NAZARIO
Associate
Justice
Acting Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
* Per
Special Order No. 679 dated
** Per
Special Order No. 681 dated
[1] Rollo, pp. 22-35.
[2] Penned by Judge Celso O. Baguio; rollo, pp. 7-15.
[3] Rollo, pp. 16-17.
[4]
[5] Records, Folder 1, p. 57.
[6] An endowment policy is one under the terms of which the insurer binds himself to pay a fixed sum to the insured if the latter survives for a specified period (maturity date stated in the policy), or, if he dies within such period, to some other person indicated. (De Leon, The Insurance Code of the Philippines Annotated [2002 ed.], p. 438). Under Section 180 of the Insurance Code, endowment contracts shall be considered life insurance contracts for purposes of said code.
[7] A rider is a printed or typed stipulation contained on a slip of paper attached to the policy and forming an integral part thereof. (De Leon, The Insurance Code of the Philippines Annotated [2002 ed.], p. 186).
[8] Records, Folder 1, p. 44.
[9]
[10]
[11]
[12]
[13]
[14]
[15] Rollo, pp. 42-46.
[16]
[17]
[18]
[19]
[20]
[21] Records, Folder 2, pp. 388-392.
[22]
[23]
[24]
[25] Rollo, pp. 16-17.
[26]
[27]
[28] As amended by A.M. No.
[29] Section 1(c), Rule 41 of the Rules of Court, as amended, provides:
SECTION 1. Subject of appeal. – An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.
No appeal may be taken from:
x x x x
(c) An order disallowing or dismissing an appeal;
[30] Neypes
v. Court of Appeals, G.R. No. 141524,
[31] Casolita, Sr. v. Court of Appeals, 341 Phil. 251, 259 (1997).
[32] Social
Security System v. Isip, G.R. No.
165417,
[33]
[34]
[35] See 44 C.J.S. 870, cited in De
[36] De
[37] Sec.
10. Every person has an insurable interest in the life and health:
(a) Of himself, of his spouse and of his children; (Emphasis ours.)
[38] Sec. 19. An interest in property insured must exist when the insurance takes effect, and when the loss occurs, but not exist in the meantime; and interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs. (Emphasis ours.)
[39] De
[40] Records, Folder 1, pp. 45-46.
[41]
[42] 102 Phil. 919, 925 (1958).
[43] 87 Phil 370, 373 (1950).
[44] Records, Folder 1, p. 44.
[45] Pacific
Banking Corporation, v. Court of Appeals, G.R. No. L-41014,
[46] Union
Manufacturing, Co., Inc. v. Phil. Guaranty Co., Inc., 150-C Phil. 69, 73 (1972).