Evaristo Feliciano filed an application with Insular Life upon the solicitation of one of its agents.
It appears that during that time, Evaristo was already suffering from tuberculosis. Such fact appeared during the medical exam, but the examiner and the company’s agent ignored it.
After that, Evaristo was made to sign an application form and thereafter the blank spaces were filled by the medical examiner and the agent making it appear that Evaristo was a fit subject of insurance.
(Evaristo could not read and understand English)
When Evaristo died, Insular life refused to pay the proceeds because of concealment.
Issue: WON Insular Life was bound by their agent’s acts.
Held: Yes.
The insurance business has grown so vast and lucrative within the past century. Nowadays, even people of modest means enter into insurance contracts. Agents who solicit contracts are paid large commissions on the policies secured by them. They act as general representatives of insurance companies.
IN the case at bar, the true state of health of the insured was concealed by the agents of the insurer. The insurer’s medical examiner approved the application knowing fully well that the applicant was sick. The situation is one in which of two innocent parties must bear a loss for his reliance upon a third person. In this case, it is the one who drafted and accepted the policy and consummated the contract. It seems reasonable that as between the two of them, the one who employed and gave character to the third person as its agent should be the one to bear the loss. Hence, Insular is liable to the beneficiaries.
(65) Insular life v. Feliciano (repeat – case # 57) 74 PHIL 4681
Facts:
Insular life filed a motion for reconsideration of the decision in the preceding case.
Issue: WON Insular Life was bound by their agent’s acts.
Held: NO (what the f…?)
There was collusion between Evaristo and the agent and the medical examiner in making it appear that Evaristo was a fit subject for insurance. When Evaristo authorized them to write the answers for him, he made them his own agents for that purpose and he was responsible for their acts in that connection.
If they falsified the answers for him, he could not evade liability for the falsification. He was not supposed to sign the application in blank. He knew that his answers would be the basis for the policy, and was required with his signature to vouch for their truth. The judgment rendered therefore in the preceding case is thus reversed, and Insular Life is absolved from liability. (bakit kaya nagreverse?... the plot thickens…
Hmm….)
(66) Edillon v. Manila Bankers Life Insurance Corp.
117 SCRA 187 Facts:
In Apr. 1969, Carmen Lapuz applied for insurance with Manila Bankers. In the application she stated the date of her birth as July 11, 1904 (around 64 yrs old). The policy was thereafter issued.
Subsequently, in May 1969, Carmen died of a car accident. Her sister, as beneficiary claimed the proceeds of the insurance.
Manila Bankers refused to pay because the certificate of insurance contained a provision excluding it’s liability to pay claims to persons under 16 or over 60.
Issue: WON the policy is void considering that the insured was over 60 when she applied.
Held: NO.
The age of Carmen was not concealed to the insurance company. Her application form indicated her true age. Despite such information, Manila Bankers accepted the premium and issued the policy. It had all the time to process the application and notice the applicant’s age. If it failed to act, it was because Manila Bankers was willing to waive such disqualifications or it simply overlooked such fact. It is therefore estopped from disclaiming any liability.
(67) Gonzalez Lao v. Yek Tong Lin Fire & Marine Insurance 55 PHIL 386
Facts:
Gonzales was issued 2 fire insurance policies by Yek for 100T covering his leaf tobacco prducts.
They were stored in Gonzales’ building on Soler St., which on Jan. 11, 1928, burned down.
Art. 3 of the Insurance policies provided that: “Any insurance in force upon all or part of the things unsured must be declared in writing by the insured and he (insured) should cause the company to insert or mention it in the policy. Without such requisite, such policy will be regarded as null and void and the insured will be deprived of all rights of indemnity in case of loss.”
Notwithstanding said provision, Gonzales entered into other insurance contracts. When he sought to claim from Yek after the fire, the latter denied any liability on the ground of violation of Art. 3 of the said policies.
Gonzales however proved that the insurer knew of the other insurance policies obtained by him long efore the fire, and the insurer did NOT rescind the insurance polices in question but demanded and collected from the insured the premiums.
Issue: WON Yek is still entitled to annul the contract.
Held: NOPE.
The action by the insurance company of taking the premiums of the insured notwithstanding knowledge of violations of the provisions of the policies amounted to waiver of the right to annul the contract of insurance.
(68) Tan Chay Heng v. West Coast Life 51 Phil 80
Facts:
In 1926, Tan Chay Heng sued West Coast on the policy allegedly issued to his “uncle”, Tan Caeng who died in 1925. He was the sole beneficiary thereof.
West Coast refused on the ground that the policy was obtained by Tan Caeng with the help of agents Go Chuilian, Francisco Sanchez and Dr. Locsin of West Coast.
West Coast said that it was made to appear that Tan Caeng was single, a merchant, health and not a drug user, when in fact he was married, a laborer, suffering form tuberculosis and addicted to drugs.
West Coast now denies liability based on these misrepresentations.
Tan Chay contends that West Coast may not rescind the contract because an action for performance has already been filed.
Trial court found for Tan Chay holding that an insurer cannot avoid a policy which has been procured by fraud unless he brings an action to rescind it before he is sued thereon.
Issue: WON West Coast’s action for rescission is therefore barred by the collection suit filed by Tan Chay.
Held: NO.
Precisely, the defense of West Cast was that through fraud in its execution, the policy is void ab initio, and therefore, no valid contract was ever made. Its action then cannot be fore rescission because an action to rescind is founded upon and presupposes the existence of the contract. Hence, West Coast’s defense is not barred by Sec. 47.
In the instant case, it will be noted that even in its prayer, the defendant does not seek to have the alleged insurance contract rescinded. It denies that it ever made any contract of insurance on the life of Tan
Caeng, or that any such a contract ever existed, and that is the question which it seeks to have litigated by its special defense. In the very nature of things, if the defendant never made or entered into the contract in question, there is no contract to rescind, and, hence, section 47 upon which the lower court based its decision in sustaining the demurrer does not apply.
As stated, an action to rescind a contract is founded upon and presupposes the existence of the contract which is sought to be rescinded. If all of the material matters set forth and alleged in the defendant's special plea are true, there was no valid contract of insurance, for the simple reason that the minds of the parties never met and never agreed upon the terms and conditions of the contract. We are clearly of the opinion that, if such matters are known to exist by a preponderance of the evidence, they would constitute a valid defense to plaintiff's cause of action. Upon the question as to whether or not they are or are not true, we do not at this time have or express any opinion, but we are clear that section 47 does not apply to the allegations made in the answer, and that the trial court erred in sustaining the demurrer.
(69) Qua Chee Gan v. Law Union & Rock Insurance 98 PHIL 85
Facts:
Before the last war, Qua Chee Gan owned 4 warehouses or bodegas (designated as Bodegas nos. 1 to 4) in Tabaco, Albay, used for the storage of stocks of copra and of hemp, baled and loose, in which he dealt extensively.
They had been, with their contents, insured with Law Union since 1937, and the loss made payable to the Philippine National Bank as mortgagee of the hemp and copra, to the extent of its interest.
Fire broke out in, 1940, and lasted almost one week, gutted and completely destroyed Bodegas Nos. 1, 3 and 4, with the merchandise stored therein.
Qua informed the insurer by telegram on the same date; and on the next day, the insurer sent fire adjusters to estimate the loss. The loss was estimated at 370T. Law Union refused to pay contending that Qua purposely set fire to his bodegas and violation of warranties and conditions as agreed.
Law Union then filed a criminal case for arson, but the same was dismissed by the trial court. Qua Chee thereafter instituted this civil case for the collection of the proceeds of insurance.
As defense, Law Union Rock contends that Qua Chee violated the provisions agreed upon in a rider in the insurance policy where:
o a fire hydrants should be placed every 150 feet of the external wall measurement, since there are only 2 and another 2 in a further area owned by the municipality.
o Qua Chee failed to maintain the agreed water pressure and the 100 feet of fire hose o He did maintain 20 fire brigade men within the premises
Insurer also averred that Qua Chee violated the provision of the Hemp Warranty which prohibits the storage of oils when he stored gasoline in bodega 2.
Issue: WON the company can rescind the contract on the basis of such alleged violation.
Held: NO.
Law Union is barred by waiver (or rather estoppel) to claim violation of the so- called fire hydrants warranty, for the reason that knowing fully all that the number of hydrants demanded therein never existed from the very beginning, the Law Union nevertheless issued the policies in question subject to such warranty, and received the corresponding premiums. It would be perilously close to conniving at fraud upon the insured to allow Law Union to claim now 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.
The insurance company was aware, even before the policies were issued, that in the premises insured there were only two fire hydrants installed by Qua Chee Gan and two others nearby, owned by the municipality of Tabaco, contrary to the requirements of the warranty in question. Such fact appears from positive testimony for the insured that appellant's agents inspected the premises; and the simple denials of appellant's representative (Jamiczon) can not overcome that proof. That such inspection was made is moreover rendered probable by its being a prerequisite for the fixing of the discount on the premium to which the insured was entitled, since the discount depended on the number of hydrants, and the fire fighting equipment available
The alleged violation of the warranty of 100 feet of fire hose for every two hydrants, must be equally rejected, since the appellant's argument thereon is based on the assumption that the insured was bound to
maintain no less than eleven hydrants (one per 150 feet of wall), which requirement appellant is estopped from enforcing.
The supposed breach of the water pressure condition is made to rest on the testimony of witness Serra, that the water supply could fill a 5-gallon can in 3 seconds; appellant thereupon inferring that the maximum quantity obtainable from the hydrants was 100 gallons a minute, when the warranty called for 200 gallons a minute. The transcript shows, however, that Serra repeatedly refused and professed inability to estimate the rate of discharge of the water, and only gave the "5-gallon per 3-second" rate because the insistence of appellant's counsel forced the witness to hazard a guess. Obviously, the testimony is worthless and insufficient to establish the violation claimed, specially since the burden of its proof lay on appellant.
As to maintenance of a trained fire brigade of 20 men, the record is preponderant that the same was organized, and drilled, from time to give, altho not maintained as a permanently separate unit, which the warranty did not require. Anyway, it would be unreasonable to expect the insured to maintain for his compound alone a fire fighting force that many municipalities in the Islands do not even possess. There is no merit in appellant's claim that subordinate membership of the business manager (Co Cuan) in the fire brigade, while its direction was entrusted to a minor employee, renders the testimony improbable. A business manager is not necessarily adept at fire fighting, the qualities required being different for both activities.
It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in the so-called "hemp warranty." The cause relied upon by the insurer speaks of "oils (animal and/or vegetable and/or mineral and/or their liquid products having a flash point below 300° Fahrenheit", and is decidedly ambiguous and uncertain; for in ordinary parlance, "Oils" mean "lubricants" and not gasoline or kerosene. And how many insured, it may well be wondered, are in a position to understand or determine "flash point below 003°
Fahrenheit. Here, again, by reason of the exclusive control of the insurance company over the terms and phraseology of the contract, the ambiguity must be held strictly against the insurer and liberally in favor of the insured, specially to avoid a forfeiture
(70) Colado v. Insular Life 51 OG (No 12) 6269 Facts:
Vivencio Collado applied for an insurance contract with Insular life in 1948. His application was approved and he began started making premium payments. However, he defaulted and the insurance was cancelled.
He then applied for the reinstatement of his insurance policy in Nov. of 1951 and tendered the amount of premium for the years 1950-1951.
He stated that he was as of Nov. 1951 of good health, and that he had no injuries, ailments or illnesses and had not been sick for any case since 1948 (his medical check up when he applied for insurance) and that he had not consulted any physician or practitioner for any case since the date of such latest medical exam.
However, when Vivencio applied for the reinstatement, he was already sick of a fatal disease known as carcinoma of the liver and that 4 days prior to his application for insurance, he consulted a doctor regarding his condition.
The reinstatement was approved. Vivencio again failed to pay the premiums for the last quarter of Nov.
1951 and as such, Insular life sent him a notice canceling the policy.
Vivencio then died. The beneificiaries instituted the present action to recover from Insular life the death benefits of a life insurance policy valued at 2T. Insular refused to pay claiming concealment on the part of Vivencio.
Collado contends that Insular life had waived the right to rescine the policy in view of its repeated acceptance of the overdue premiums for the second and third years.
Municipal court of Manila found for Collado and Insular filed an appeal with CFI of Manila. CFI rendered judgment in favor of Insular and dismissed Collado’s complaint.
Issue: WON Insular life was estopped and could no longer cancel the contract due to the fact that it accepted the tender of overdue payments from Vivencio.
Held: NO.
It is enormously clear that when the deceased applied for a reinstatement of his policy in Nov. 1951, he had already been afflicted with the fatal ailment for a period of about four months. Furthermore, in submitting together with his application for reinstatement, a health statement to the effect that he was in
good health, Vivencio concealed the material fact that he had consulted a doctor and was then found to be afflicted with the malady.
The acceptance of Insular life of the overdue premiums did not necessarily deprive it of the right to cancel the policy in case of default incurred by the Insured in the payment of future premiums. The case would be different had the insured died at any time after the payment of overdue premiums but previous to the reinstatement of the policy, for the, Insular, by its acceptance of its overdue premiums is deemed to have waived its right to rescind the policy.
The evidence at hand shows that insofar as the payment of the last quarterly premium for 1951 was concerned, Insular had availed of the right to rescind the policy by notifying the Insured that the policy had lapsed.
(I’m sorry kung magulo yung digest.. sobrang pangit yung copya nung case.. nde ko mabasa.. mas malala pa sa reviewer na Xerox)
Section 46. The materiality of a representation is determined by the same rules as the