Eguaras vs. Great Eastern 33 Phil. 263 (1916)

Defenses not Barred by Incontestability

FACTS

Dominador Albay got the insurance company to insure his life for the sum of P5,000 and that through the representations and statements made by said Dominador Albay in his application and the favorable medical examination made by Dr. Jose A. Vidal (record, p. 126), the company agreed to the life insurance sought, and on November 6,1912, issued the policy No. 5592, the value whereof was payable to the insured’s motherin-law, Francisca Eguaras. One month after said insurance policy had been issued, that is, on December 6, 1912, the insured Dominador Albay died in the municipality of Santa Cruz, Laguna, of intestinal occlusion,

On December 6, 1912, said policy being in force, the insured died in Laguna, and defendant company refused to pay to the plaintiff the value of the policy.

Counsel for the insurance company and for West G. Smith set forth special defense that the insurance policy issued in the name of Dominador [Albay] had been obtained through fraud and deceit known and consented to by the interested parties and is therefore completely illegal, void, and ineffective; wherefore he prayed that the defendants be absolved from the complaint, with the costs against the plaintiff.

Plaintiff alleged that the grounds set forth in the special defense had been made the basis of a criminal complaint against the plaintiff, Francisca Eguaras, and Ponciano Remigio for the crime of frustrated estafa in CFI Laguna, but that they had been acquitted on said complaint.

Court rendered the against The Great Eastern Life Assurance Company, Ltd.

ISSUE

Whether the life insurance obtained by Dominador Albay, with the assistance of the insurance agent, Ponciano Remigio, is legal and valid on the contrary it was issued through fraud and deceit, 

whether the defendant, The Great Eastern Life Assurance Company, Ltd., is still under obligation to pay 

RULING

No. The Great Eastern Life Assurance Company, Ltd., absolved from the complaint,.

1. The signatures that appear on the papers referring to the insurance are so different from those which appear on the other documents which unquestionably bear the signature of the real Dominador Albay. 

2. Moreover, Dominador Albay’s age, according to the application and the insurance policy, was 40 years in 1912, while according to his personal cedulas he was only 32 years of age in 1911, so that when he was insured he must have been only 33.

It is therefore proven that the signatures on the insurance applications reading “Dominador Albay” are false and forged; that the person who presented himself to Dr. Vidal to be examined was not the real Dominador Albay, but another different person; that at the time of the application for insurance and the issuance of the policy which is the subject matter of this suit the real Dominador Albay was informed of all those machinations, wherefore it is plain that the insurance contract between the defendant and Dominador Albay is null and void because it is false, fraudulent and illegal.

The fraud which gave rise to the mistaken consent, given by the defendant company to the application for insurance made by Albay and to the execution of the contract through deceit, is plain and unquestionable. This fraud consisted in the substitution at the examination of Castor Garcia in place of the insured Dominador Albay, and as the deceit practiced in the said contract is of a serious nature, the same is ipso facto void and ineffective, in accordance with the provisions of article 1270 of the Civil Code.

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.

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