VIRGINIA PEREZ VS CA AND BF LIFEMAN INSURANCE CORP

Jan. 28, 2000 | J. Ynares-Santiago

Doctrine: A contract of insurance, like all other contracts, must be
assented to by both parties, either in person or through their agents
and so long as an application for insurance has not been either
accepted or rejected, it is merely a proposal or an offer to make a
contract.
P. Perez (Petitioners husband) insured with BF Lifeman Insurance Corp
since 1980 for P20K
Oct 1987 Insurance Agent Lalog convinced him to apply for
additional insurance coverage of P50K because they had a
promotional discount of P400 if the premium were paid annually
Oct 20, 1987 P. Perez accomplished the application form and
his wife, V. Perez paid P2,057 to Lalog
Receipt Lalog issued indicated that it was a deposit
Lalog lost the application form and had to make V. Perez
accomplish another
Nov 1, 1987 P. Perez passed the medical examination
Lalog forwarded the application w/ supporting papers to BF
Lifeman Office in Gumaca, Quezon
Nov 25, 1987 P. Perez died in an accident (rode a banca that capsized
during a storm)
application for additional insurance was still in the Gumaca office
his application was received on Nov 27, 1987 in Manila
BF Lifeman approved his application and issued the policy
without knowing he died (Dec 2, 1987)
P went to Manila to claim benefits under her husbands insurance
policies
paid P40K under 1st insurance policy (double indemnity in case of
accident)
insurance company refused to pay the claim under the additional
policy coverage of P50K (proceeds amounted to P150K because
of the triple indemnity rider on the insurance policy)
Jan 29, 1988 letter insurance company maintained that P50K
insurance had not been perfected at the time of death of P. Perez
P2,057 was refunded
Sept 21, 1990 Insurance company filed a complaint against P seeking
rescission and declaration of nullity of the insurance contract

P arg deceased had fulfilled all his prestations under the

contract and all elements of a valid contract are present
P filed a counterclaim against PR for P150K as actual damages,
P100K as exemplary damages, P30K as attys fees and P10K
expenses for litigation

TC ruled in favor of P
Premium for additional P50K had been fully paid
Even if sum of P2,075 were to be considered merely partial
payment, same does not affect validity of policy
Deceased had fully complied with requirements of the insurance
policy: he paid, signed application, passed medical exam
Should not be made to suffer the subsequent delay in transmittal
of his application form not in his control
CA reversed the decision of the TC
P50K insurance contract couldnt have been perfected because
at the time the policy had been issued, P. Perez was already dead
Provision in application form ". . . there shall be no contract of
insurance unless and until a policy is issued on this application
and that the policy shall not take effect until the first premium
has been paid and the policy has been delivered to and accepted
by me/us in person while I/we, am/are in good health
CA held that contract of insurance had to be assented to by both
parties and so long as the application for insurance has not been
either accepted or rejected, it is merely an offer or proposal to
make a contract
P ARG TO SC there was a consummated contract of insurance
between deceased and insurance company and that the condition that
the policy issued by the corporation be delivered and received by
applicant in good health, is potestative, being dependent upon the will
of the insurance company, and is therefore null and void.
SC: Contract of insurance, like other contracts, must be assented to by
both parties either in person or by their agents. If an application has
not been either accepted or rejected, its merely an offer or proposal to
make a contract.
When Ps hubby filed an application, his application was subject to the
acceptance of the insurance company. Moreover, the perfection of the
contract was conditioned upon compliance with several requisites:
policy must have been issued
premiums paid

policy must have been delivered to and accepted by the

applicant while he is in good health

Assent of insurance company was not given when it merely received

the application form and the supporting papers. Only when the above
conditions are satisfied is when the contract of insurance is deemed to
have been perfected.
P hubby died on Nov 25, 1987 and at the time, the papers for
additional insurance coverage were still at the branch office of
respondent corporation.
no way that acceptance of application could have been
communicated to him since he was already dead
Also, the last condition is not potestative
Potestative condition depends on the exclusive will of one of
the parties and is thus void
But health of applicant at the time of delivery of the policy is
beyond the control or will of the insurance company
Its more a suspensive condition, whereby the acquisition of
rights depends on the happening of an event that constitutes the
condition
The non-fulfillment of this condition resulted in the nonperfection of the contract
LESSON STUFF
Insurance contract whereby, for a stipulated consideration, one
party undertakes to compensate the other for loss on a specified
subject by specified perils.
Contract meeting of the minds between 2 persons whereby one
binds himself, with respect to the other, to give something or to
render some service
o Art 1318 no contract unless the ff: requisites concur:
Consent of the contracting parties
Object certain which is the subject matter of the
contract
Cause of the obligation which is established
o Consent must be manifested by the meeting of the offer
and the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be certain
and the acceptance absolute
As stated above, a contract of insurance, like other contracts, must be
assented to by both parties either in person or by their agents. So long
as an application for insurance has not been either accepted or

rejected, it is merely an offer or proposal to make a contract. The

contract, to be binding from the date of application, must have been a
completed contract, one that leaves nothing to be done, nothing to be
completed, nothing to be passed upon, or determined, before it shall
take effect. There can be no contract of insurance unless the minds of
the parties have met in agreement.