RAFAEL ENRIQUEZ vs. SUN LIFE ASSURANCE COMPANY OF
The amount of insurance coverage depended upon the
CANADA G.R. No. L-15895 November 29, 1920
FACTS:
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 provisional receipt.
The application was forwarded to the head office of the company at
Montreal, Canada and on November 26, 1917 a notice of acceptance was
sent by cable to Manila. (There is no evidence however, whether on the
same day the cable was received notice was sent by the Manila office of
Herrer that the application had been accepted)
On December 4, 1917, the policy was issued. On December 18, 1917,
Herrer communicated his desire to withdraw his application through his
lawyer.
The local office replied to Mr. Torres, stating that the policy had been
issued, and called attention to the notification of November 26, 1917.
The reply was received by Herrer's council a day after the latter died.
Plaintiff 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.
ISSUE:
Whether or not the insurance contract between Sun Life and Herrer has
been perfected
RULING:
No, 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.
An acceptance of an offer of insurance not actually or constructively
communicated to the proposer does not make a contract. Only the
mailing of acceptance, it has been said, completes the contract of
insurance, as the locus poenitentiae is ended when the acceptance has
passed beyond the control of the party.
An acceptance made by letter shall not bind the person making the offer
except from the time it came to his knowledge (Civil Code Art. 1262).
When a letter or other mail matter is addressed and mailed with postage
prepaid there is a rebuttable presumption of fact that it was received by
the addressee as soon as it could have been transmitted to him in the
ordinary course of the mails. But if any one of these elemental facts fails
to appear, it is fatal to the presumption. A letter will not be presumed to
have been received by the addressee unless it is shown that it was
deposited in the post-office, properly addressed and stamped.
ETERNAL GARDENS MEMORIAL PARK CORPORATION,
petitioner, vs. THE PHILIPPINE AMERICAN LIFE INSURANCE
COMPANY, respondent.
FACTS:
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.
existing balance of the purchased burial lots.
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 Chuang's death.
After more than a year, Philamlife had not furnished Eternal with any
reply to the latter's insurance claim. This prompted Eternal to demand
from Philamlife the payment of the claim for PhP 100,000 on April 25,
1986.8
In response to Eternal's demand, Philamlife denied Eternal's insurance
claim in a letter dated May 20, 1986. Consequently, Eternal filed a case
before the Makati City Regional Trial Court (RTC).
DECISION OF LOWER COURTS:
(1) RTC : in favor of Eternal. due to Philamlife's inaction from the
submission of the requirements of the group insurance on December 29,
1982 to Chuang's death on August 2, 1984, as well as Philamlife's
acceptance of the premiums during the same period, Philamlife was
deemed to have approved Chuang's application. The RTC said that since
the contract is a group life insurance, once proof of death is submitted,
payment must follow.
(2) CA : in favor of Philamlife. there being no application form, Chuang
was not covered by Philamlife's insurance.
ISSUE:
May the inaction of the insurer on the insurance application be
considered as approval of the application?
RULING:
YES
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 effective 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 effective upon
contracting a loan with Eternal while the second sentence appears to
require Philamlife to approve the insurance contract before the same can
become effective.
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 latter's interest.
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 effect 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 Chuang's insurance
application. However, Philamlife failed to do so; thus, Philamlife is
deemed to have received Chuang's insurance application.
the seemingly conflicting provisions must be harmonized to mean that
upon a party's purchase of a memorial lot on installment from Eternal,
an insurance contract covering the lot purchaser is created and the same
is effective, 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 Effective 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.
YES. CA reversed
construed in favor of the insured and in favor of the effectivity of the
insurance contract
Upon a party’s purchase of a memorial lot on installment from Eternal,
an insurance contract covering the lot purchaser is created and the same
is effective, valid, and binding until terminated by Philamlife by
disapproving the insurance application
Moreover, the mere inaction of the insurer on the insurance application
must not work to prejudice the insured
The termination of the insurance contract by the insurer must be explicit
and unambiguous
PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF
APPEALS
FACTS:
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 suffered 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
Ernani’s 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 attorney’s 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 respondent’s 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
respondent’s 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.