Enriquez vs Sun Life
case. For instance, article 16 of the Civil Code
Facts: This is an action brought by the plaintif
ad administrator of the estate of the late
Joaquin Ma. Herrer to recover from the
defendant life insurance company the sum of
pesos 6,000 paid by the deceased for a life
annuity. The trial court gave judgment for the
defendant. Plaintif appeals. The undisputed
facts are these: On September 24, 1917,
Joaquin Herrer made application to the Sun Life
Assurance Company of Canada through its
office in Manila for a life annuity. Two days later
he paid the sum of P6,000 to the manager of
the company's Manila office and was given a
receipt. The application was immediately
forwarded to the head office of the company at
Montreal, Canada. On November 26, 1917, the
head office gave notice of acceptance by cable
to Manila. (Whether on the same day the cable
was received notice was sent by the Manila
office of Herrer that the application had been
accepted, is a disputed point, which will be
discussed later.) On December 4, 1917, the
policy was issued at Montreal. On December
18, 1917, attorney Aurelio A. Torres wrote to
the Manila office of the company stating that
Herrer desired to withdraw his application. The
following day the local office replied to Mr.
Torres, stating that the policy had been issued,
and called attention to the notification of
November 26, 1917. This letter was received
by Mr. Torres on the morning of December 21,
1917. Mr. Herrer died on December 20, 1917.
Issue: WON the insurance contract was
perfected.
Held: No. Our deduction from the evidence on
this issue must be that the letter of November
26, 1917, notifying Mr. Herrer that his
application had been accepted, was prepared
and signed in the local office of the insurance
company, was placed in the ordinary channels
for transmission, but as far as we know, was
never actually mailed and thus was never
received by the applicant. While, as just
noticed, the Insurance Act deals with life
insurance, it is silent as to the methods to be
followed in order that there may be a contract
of insurance. On the other hand, the Civil Code,
in article 1802, not only describes a contact of
life annuity markedly similar to the one we are
considering, but in two other articles, gives
strong clues as to the proper disposition of the
provides that "In matters which are governed
by special laws, any deficiency of the latter
shall be supplied by the provisions of this
Code." In the Civil Code is found article 1262
providing that "Consent is shown by the
concurrence of ofer and acceptance with
respect to the thing and the consideration
which are to constitute the contract. An
acceptance made by letter shall not bind the
person making the ofer except from the time it
came to his knowledge. The contract, in such
case, is presumed to have been entered into at
the place where the ofer was made." This
latter article is in opposition to the provisions of
article 54 of the Code of Commerce. We hold
that the contract for a life annuity in the case
at bar was not perfected because it has not
been proved satisfactorily that the acceptance
of the application ever came to the knowledge
of the applicant
Eternal Gardens vs Philamlife
On December 10, 1980, respondent Philippine
American Life Insurance Company (Philamlife)
entered into an agreement denominated as
Creditor Group Life Policy No. P-19202 with
petitioner Eternal Gardens Memorial Park
Corporation (Eternal). Under the policy, the
clients of Eternal who purchased burial lots
from it on installment basis would be insured
by Philamlife. The amount of insurance
coverage depended upon the existing balance
of the purchased burial lots. The policy was to
be efective for a period of one year, renewable
on a yearly basis.
Eternal was required under the policy to submit
to Philamlife a list of all new lot purchasers,
together with a copy of the application of each
purchaser, and the amounts of the respective
unpaid balances of all insured lot purchasers.
In relation to the instant petition, Eternal
complied by submitting a letter dated
December 29, 1982,4 containing a list of
insurable balances of its lot buyers for October
1982. One of those included in the list as "new
business" was a certain John Chuang. His
balance of payments was PhP 100,000. On
August 2, 1984, Chuang died. Eternal sent a
letter dated August 20, 19845 to Philamlife,
which served as an insurance claim for
Chuangs death. Attached to the claim were
the following documents: (1) Chuangs
Certificate of Death; (2) Identification
Certificate stating that Chuang is a naturalized
Filipino Citizen; (3) Certificate of Claimant; (4)
Certificate of Attending Physician; and (5)
Assureds Certificate. In reply, Philamlife wrote
Eternal a letter on November 12, 1984,6
requiring Eternal to submit the following
documents relative to its insurance claim for
Chuangs death: (1) Certificate of Claimant
(with form attached); (2) Assureds Certificate
(with form attached); (3) Application for
Insurance accomplished and signed by the
insured, Chuang, while still living; and (4)
Statement of Account showing the unpaid
balance of Chuang before his death. Eternal
transmitted the required documents through a
letter dated November 14, 1984,7 which was
received by Philamlife on November 15, 1984.
After more than a year, Philamlife had not
furnished Eternal with any reply to the latters
insurance claim. This prompted Eternal to
demand from Philamlife the payment of the
claim for PhP 100,000 on April 25, 1986.
Philamlife denied Eternals insurance claim and
argued that the provision on Efective Date of
Coverage under the policy which states that
"there shall be no insurance if the application is
not approved by the Company." Since no
application had been submitted by the
Insured/Assured, prior to his death, for our
approval but was submitted instead on
November 15, 1984, after his death, Mr. John
Uy Chuang was not covered under the Policy.
Issue: WON the inaction of the insurer on the
insurance application be considered as
approval of the application?
Held: Yes. The fact of the matter is, the letter
dated December 29, 1982, which Philamlife
stamped as received, states that the insurance
forms for the attached list of burial lot buyers
were attached to the letter. Such stamp of
receipt has the efect of acknowledging receipt
of the letter together with the attachments.
Such receipt is an admission by Philamlife
against its own interest.13 The burden of
evidence has shifted to Philamlife, which must
prove that the letter did not contain Chuangs
insurance application. However, Philamlife
failed to do so; thus, Philamlife is deemed to
have received Chuangs insurance application.
However, the question arises as to whether
Philamlife assumed the risk of loss without
approving the application.
This question must be answered in the
affirmative.
As earlier stated, Philamlife and Eternal
entered into an agreement denominated as
Creditor Group Life Policy No. P-1920 dated
December 10, 1980. In the policy, it is provided
that: EFFECTIVE DATE OF BENEFIT.
The insurance of any eligible Lot Purchaser
shall be efective on the date he contracts a
loan with the Assured. However, there shall be
no insurance if the application of the Lot
Purchaser is not approved by the Company.An
examination of the above provision would show
ambiguity between its two sentences. The first
sentence appears to state that the insurance
coverage of the clients of Eternal already
became efective upon contracting a loan with
Eternal while the second sentence appears to
require Philamlife to approve the insurance
contract before the same can become
efective.It must be remembered that an
insurance contract is a contract of adhesion
which must be construed liberally in favor of
the insured and strictly against the insurer in
order to safeguard the latters interest. Clearly,
the vague contractual provision, in Creditor
Group Life Policy No. P-1920 dated December
10, 1980, must be construed in favor of the
insured and in favor of the efectivity of the
insurance contract. On the other hand, the
seemingly conflicting provisions must be
harmonized to mean that upon a partys
purchase of a memorial lot on installment from
Eternal, an insurance contract covering the lot
purchaser is created and the same is efective,
valid, and binding until terminated by
Philamlife by disapproving the insurance
application. The second sentence of Creditor
Group Life Policy No. P-1920 on the Efective
Date of Benefit is in the nature of a resolutory
condition which would lead to the cessation of
the insurance contract. Moreover, the mere
inaction of the insurer on the insurance
application must not work to prejudice the
insured; it cannot be interpreted as a
termination of the insurance contract. The
termination of the insurance contract by the
insurer must be explicit and unambiguous.
Philamcare Healthy Systems vs CA
Ernani Trinos applied for a health care coverage
with Philamcare Health Systems, Inc. To the
question Have you or any of your family
members ever consulted or been treated for
high blood pressure, heart trouble, diabetes,
cancer, liver disease, asthma or peptic ulcer?,
Ernani answered No. Under the agreement,
Ernani is entitled to avail of hospitalization
benefits and out-patient benefits. The coverage
was approved for a period of one year from
March 1, 1988 to March 1, 1989. The
agreement was however extended yearly until
June 1, 1990 which increased the amount of
coverage to a maximum sum of P75,000 per
disability. During the period of said coverage,
Ernani sufered a heart attack and was
confined at the Manila Medical Center (MMC)
for one month. While in the hospital, his wife
Julita tried to claim the benefits under the
health care agreement. However, the
Philamcare denied her claim alleging that the
agreement was void because Ernani concealed
his medical history. Doctors at the MMC
allegedly discovered at the time of Ernanis
confinement that he was hypertensive, diabetic
and asthmatic, contrary to his answer in the
application form. Thus, Julita paid for all the
hospitalization expenses.
After Ernani was discharged from the MMC, he
was attended by a physical therapist at home.
Later, he was admitted at the Chinese General
Hospital. Due to financial difficulties, however,
respondent brought her husband home again.
In the morning of April 13, 1990, Ernani had
fever and was feeling very weak. Respondent
was constrained to bring him back to the
Chinese General Hospital where he died on the
same day.
Julita filed an action for damages and
reimbursement of her expenses plus moral
damages attorneys fees against Philamcare
and its president, Dr. Benito Reverente. The
Regional Trial court or Manila rendered
judgment in favor of Julita. On appeal, the
decision of the trial court was affirmed but
deleted all awards for damages and absolved
petitioner Reverente. Hence, this petition for
review raising the primary argument that a
health care agreement is not an insurance
contract; hence the incontestability clause
under the Insurance Code does not apply.
ISSUES: (1) Whether or not the health care
agreement is not an insurance contract (2)
Whether or not there is concealment of
material fact made by Ernani
HELD: (1)YES. Section2 (1)of the Insurance
Code defines a contract of insurance as an
agreement whereby one undertakes for a
consideration to indemnify another against
loss, damage, or liability arising from an
unknown or contingent event.
Section 3 of the Insurance Code states that any
contingent or unknown event, whether past or
future, which my damnify a person having an
insurable against him, may be insured against.
Every person has an insurable interest in the
life and health of himself. Section 10 provides
that every person has an insurable interest in
the life and health (1) of himself, of his spouse
and of his children. The insurable interest of
respondents husband in obtaining the health
care agreement was his own health. The health
care agreement was in the nature of non-life
insurance, which is primarily a contract of
indemnity. Once the member incurs hospital,
medical or any other expense arising from
sickness, injury or other stipulated contingent,
the health care provider must pay for the same
to the extent agreed upon under the contract.
(2) NO. The answer assailed by petitioner was
in response to the question relating to the
medical history of the applicant. This largely
depends on opinion rather than fact, especially
coming from respondents husband who was
not a medical doctor. Where matters of opinion
or judgment are called for answers made I
good faith and without intent to deceive will
not avoid a policy even though they are untrue.
The fraudulent intent on the part of the insured
must be established to warrant rescission of
the insurance contract. Concealment as a
defense for the health care provider or insurer
to avoid liability is an affirmative defense and
the duty to establish such defense by
satisfactory and convincing evidence rests
upon the provider or insurer. In any case, with
or without the authority to investigate,
petitioner is liable for claims made under the
contract. Having assumed a responsibility
under the agreement, petitioner is bound to
answer to the extent agreed upon. In the end,
the liability of the health care provider attaches
once the member is hospitalized for the
disease or injury covered by the agreement or
wherever he avails of the covered benefits
which he has prepaid. Being a contract of
adhesion, the terms of an insurance contract
are to be construed strictly against the party
which prepared the contract the insurer. By
reason of the exclusive control of the insurance
company over the terms and phraseology of
the insurance contract, ambiguity must be
strictly interpreted against the insurer and
liberally in favor of the insured, especially to
avoid forfeiture. This is equally applicable to
Health Care Agreements.