29/12/2025
The Supreme Court (SC) emphasized that ambiguity in an insurance contract should be interpreted in favor of the insured.
AMBIGUITY IN INSURANCE CONTRACT SHOULD BE INTERPRETED IN FAVOR OF THE INSURED—SUPREME COURT
The Supreme Court (SC) ruled that ambiguity in the provisions of pre-need plans and other insurance contracts must be resolved in favor of the insured since these contracts are prepared by the insurer and leave little room for negotiation, stressing that the official wording of the policy shall prevail over the company guidelines.
In a 14-page decision penned by Associate Justice Antonio Kho, Jr., the SC’s Second Division has directed educational insurance company Eternal Education Plan Inc. to pay Charmal Kintanar Php192,067, which covers the college tuition and other standard fees incurred for her daughter’s university education, in accordance with the terms of their educational plan agreement.
Kintanar is the transferee of an Educational Program Agreement provided by Eternal Education Plans. She acquired the pre-need plan from her friend, who bought it on August 2, 1990.
The pre-need plan has a maturity date of August 2, 2006, and a gross price of Php12,820 payable in 20 installments of Php461 each. After acquiring the pre-need plan, Kintanar continued paying the installments until completion.
In June 2010, she sought to collect under the pre-need plan by demanding the full amount of her daughter's college tuition fees. Eternal Education Plan, however, only paid her at the prevailing rate for non-exclusive schools as of 2006, when the pre-need plan matured. This prompted Kintanar to file a complaint before the Regional Trial Court (RTC).
Eternal Education Plan initially asked the court to junk the complaint due to lack of jurisdiction, citing Section 558 of Republic Act No. 9829, or the Pre-need Code of the Philippines, which vested to the Insurance Commission the exclusive jurisdiction over the case.
The RTC denied the motion, ruling that under paragraph XXVIII of their pre-need plan, all causes of action arising from the parties' agreement shall be filed exclusively with the courts of Makati City. Eventually, the RTC ruled in favor of Eternal Plan Education, prompting Kintanar to elevate the case before the Court of Appeals (CA).
Subsequently, the CA ruled that the complaint
must be dismissed, but for different grounds emphasizing that the RTC has no jurisdiction over the complaint as it belongs to the Insurance Commission under Section 55 of Republic Act No. 9829.
The Supreme Court agreed with the CA, stressing that since the decision of the RTC was rendered without jurisdiction, the same should be declared as void ab initio.
But instead of remanding the case to the proper administrative agency, the high court decided to resolve its merit as it observed that the litigation between the parties has been ongoing since 2010, and ordering back the case would cause further delay.
In ruling in Kintanar's favor, the highest bench noted that although she was not the original owner of the pre-need plan, as she just purchased it from her friend, she is considered a transferee. But the Eternal Education Plan is still obliged to fulfill its guarantee to her that it shall pay the college tuition fees of her child irrespective of future cost.
It underscored that Kintanar is entitled to designate a new Scholar, which she did when she named her daughter as the new Scholar upon transfer of the policy in 1990. It cited Article VII of the policy on the maturity of the pre-need plan, which states that, for college programs, if the scholar is below 11 years old, the maturity date shall be when the scholar acquires eligibility to enter college or upon their enrollment when they reach their 17th birthday.
The SC explained that Kintanar acquired the pre-need plan on August 2, 1990; her daughter was only three years old, having been born on July 8, 1993, making the maturity date under the conditions in Article VII apply as her daughter reached her 17th birthday on July 8, 2010.
It also rejected Eternal Education Plan's contention that their existing company guidelines shall prevail, which states that in case the new scholar is younger than or the same age as the original scholar.
The highest bench noted that since the Eternal Education Plan is the one who prepared the insurance plan, the same should be interpreted prejudicially to it, making the start of the college education of Kintanar's daughter well within the maturity date. The same proves that Eternal Education Plan is obliged to pay her college tuition or other standard school fees as or when they fall or become due irrespective of future cost.
It added that the official wording of the policy stipulated in the plan is controlling over its existing company guidelines.
