by Ingrid Calimlim

FRANCISCA EGUARAS v. GREAT EASTERN LIFE ASSURANCE COMPANY, GR No. 10436, 1916-01-24

Facts:

hrough bill of exceptions by the counsel for the defendant, the Great Eastern Life Assurance Company, Ltd., from the judgment of September 14, 1914, whereby the Court of First Instance of Laguna sentenced it to pay to the plaintiff... the sum of P5,000, the value of the insurance policy in question, with legal i

On April 14, 1913, counsel for Francisca Eguaras filed a written complaint in the said Laguna court, alleging as a cause of action that about October 14, 1912, her son-in-law Dominador Albay had applied in writing to the defendant insurance company to insure his life for the... sum of P5.000, naming... counsel for Francisca Eguaras filed a written complaint in the said Laguna court, alleging as a cause of action that about October 14, 1912, her son-in-law Dominador Albay had applied in writing to the defendant insurance company to insure his life for the... sum of P5.000, naming as the beneficiary in case of his death the plaintiff Francisca Eguaras; that after compliance with the requisites and the investigation carried on by the defendant company, and it had been satisfied concerning the physical condition of the... applicant, it accepted the application for insurance and on November 6,1912, issued policy No. 5592, Exhibit A, which has been made a part of the complaint, whereby the said insurance company insured the life of the said Dominador Albay in the sum of P5,000,... payable in the event of his death to Francisca Eguaras; that on December 6, 1912, said policy No. 5592 being in force, the insured, Dominador Albay, died in the municipality of Santa Cruz, Laguna, and despite the fact that the beneficiary submitted satisfactory proofs of his... death and that the defendant company investigated the event, still it refused and continues to refuse to pay to the plaintiff the value of the policy, Exhibit A, thereby causing damages estimated at P1,000. The court was therefore asked to render judgment... against the Great Eastern Life Assurance Company, Ltd., and its general agent, West G. Smith, by sentencing them to pay to the plaintiff the sum of P5,000, the value of policy No. 5592, plus the sum of P1,000 for damages inflicted upon them, in... addition to the costs of the suit.

Issues:

whether the life insurance obtained by Dominador Albay, with the assistance of the insurance agent, Ponciano Remegio, is legal and valid or whether on the contrary it was issued through fraud and deceit, and in such case,... whether the defendant, The Great Eastern Life Assurance Company, Ltd., is still under obligation to pay the value thereof to the plaintiff

Ruling:

the insurance contract between the defendant and Dominador Albay is null and void because... it is false, fraudulent and illegal.

Article 1269 of the Civil Code states:

"There is deceit when by words or insidious machinations on the part of one of the contracting parties the other is induced to execute a contract which without them he would not have made."

It is essential to the nature of the deceit, to which the foregoing article refers, that said deceit be prior to or contemporaneous with the consent that is a necessary requisite for perfecting the contract, but not that it may have occurred or happened thereafter. A contract... is therefore deceitful, for the execution whereof the consent of one of the parties has been secured by means of fraud, because he was persuaded by words or insidious machinations, statements or false promises, and a defective consent wrung from him, even though such do not... constitute estafa or any other criminal act subject to the penal law.

The defendant company accepted the application for insurance made by Dominador Albay and executed the contract comprised under articles 416 to 431 of the Code of Commerce, although for the perfecting thereof the insured, Albay, as he was not in good health, by connivance with... the insurance company's agent, presented Castor Garcia to the physician Vidal, who was commissioned by the company to examine applicants for life insurance and in view of the favorable report of the said physician, who reported and certified that the person examined by him under... the name of Dominador Albay was in good health and possessed the qualifications required by said insurance company for perfecting the contract, so the company freely and willingly consented to the execution thereof, effectively induced thereto by the result of the medical... examination and of the favorable professional report issued in view of the appearance of an individual who was in good health, but different from the invalid who was seeking to be insured and who died one month and twenty-three days after the insurance had been granted.

If there had been no substitution, if the insured Dominador Albay had been the person who appeared and was examined by the physician Vidal, said Albay being manifestly different from Castor Garcia, the said physician would not have affirmed at the trial that it was Garcia who... presented himself for the physical examination, accompanied by the insurance company's agent, at his residence in San Pablo, and he would have failed to recognize him when he saw him in the court, nor is any mistake on the physician's part possible as the inspection and physical... examination of the individual lasted for something like the space of an hour.

The supposition that Dominador Albay was not ill in October, 1912, would not explain why he did not present himself in person to be examined by the physician Vidal; and when he failed to do so and by agreement with the agent Remigio was willing to be substituted by Castor

Garcia to the end that in any event no defect or personal quality should be discovered to hinder the perfecting of the insurance contract, such a change in the person constitutes one of the means of fraud which, although it may not partake of the nature of a crime, essentially... nullifies the insurance contract executed.

With this array of circumstantial evidence derived from facts duly proven as a result of the present suit, we get, if not a moral certainty, at least a full conviction that when Castor Garcia presented himself to be examined by the physician Vidal in place of Dominador Albay,... serious deceit occurred in perfecting the insurance contract, for had the agent of the company not been deceived it would not have granted the insurance applied for by Albay, nor would it have executed the contract by virtue whereof payment is claimed of the value o£ the policy... obtained through fraud; and consequently on such assumptions it is improper, nor is it permitted by the law, to order collection of the amount claimed.

Principles: