Policy

5. Vicente E. Tang v. Court of Appeals

Abad Santos, J.

Facts: Lee, a 61 year-old illiterate who spoke only Hokkien applied for life insurance for
P60,000 which was granted because she indicated in her application that she was healthy. Her
nephew Vicente E. Tang was designated as beneficiary. She applied for an additional P40,000
which did not require further medical examination, only a statement that the findings of the
medical examiner are full, complete, and true. She died 6 months later and her nephew filed a
claim for the P100,000. The claim was denied on the allegation that there was concealment and
representation.

The Court of First Instance dismissed Tang’s claim on this ground.

The Court of Appeals Affirmed

Issue: Whether or not Art. 1332 of the New Civil Code applies in this case.

Ruling: No.

Art 1332 of the New Civil Code stipulates:

“Art. 1332. When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract must show
that the terms thereof have been fully explained to the former.’’

It should be noted that under Art. 1332 abovequoted, the obligation to show that the terms of the
contract had been fully explained to the party who is unable to read or understand the language
of the contract, when fraud or mistake is alleged, devolves on the party seeking to enforce it.
Here the insurance company is not seeking to enforce the contracts; on the contrary, it is seeking
to avoid their performance. It is petitioner who is seeking to enforce them even as fraud or
mistake is not alleged. Accordingly, respondent company was under no obligation to prove that
the terms of the insurance contracts were fully explained to the other party.

NOTE: ANTONIO, J Concurring opinion

 Uberrimae fidei rule in insurance policies.

 The use of petitioner in this case of Art. 1332 for his position is unusual according to
Antonio, J. He cannot insist on the validity of the policy and insist that Art. 1332 applies
since the latter would mean that the policy must be avoided.