January 24, 1916
Ponente: Torres, J.
FACTS
In October 1912, a certain Dominador Albay applied for life insurance with The Great Eastern Life Assurance Company. He named his mother-in-law, Francisca Eguaras, as beneficiary who stood to receive P5,000 in case he died. Great Eastern's resident doctor conducted a medical check-up on Albay, who was found to be healthy and in good shape. As such, his application for life insurance was approved.
Two months later, Albay died of intestinal occlusion. Eguaras submitted all the required documents to claim the benefits, but Great Eastern refused to give her anything, citing fraud. Consequently, Eguaras filed a complaint against the insurance company.
During the course of the judicial proceedings, it was discovered that the person who underwent medical check-up was not Albay but a man named Castor Garcia. The real Albay's signatures also did not match the signatures in the insurance application.
It turned out that the real Albay was suffering from tuberculosis. The insurance company's agent, Ponciano Remigio, was in cahoots with Garcia to use Albay in order to fool the insurance company, collect the claims, and divide the proceeds for themselves. Remigio knew very well that the real Albay, sickly as he was, had no chance of passing the medical check-up and of being granted insurance.
RULING
Petition dismissed. The Great Eastern Life Assurance Company, Ltd., is absolved from the complaint.
The Court held that Albay's application for life insurance was attended by fraud and deceit. The fraud consisted in the substitution at the examination of Castor Garcia in place of the insured Dominador Albay.
Since the deceit practiced in the contract of insurance is of a serious nature, the same is ipso facto void and ineffective, in accordance with the provisions of article 1270 of the (old) Civil Code.
When one of the contracting parties (in this case, the insurance company) may have given its consent through error, violence, intimidation, or deceit, in any of such cases the contract is void, even though, despite this nullity, no crime was committed.
