FORTUNATA LUCERO VIUDA DE SINDAYEN v. INSULAR LIFE a. “par.

3 That the said policy shall not take effect

ASSURANCE CO., LTD. until the first premium has been paid and the
GR 41702 | Butte, J. | Sept. 4, 1935 policy has been delivered to and accepted by me,
while I am in good health.”
NATURE: This is an appeal from a judgment of CFI filed by Vda. b. "par.4. That the agent taking this application has
de Sindayen. (CFI dismissed the action). no authority to make, modify or discharge
contracts, or to waive any of the Company's right
FACTS or requirements."
1. Arturo Sindayen and his wife went to Camiling, Tarlac to 16. Insular Life argued that the contract (insurance policy) was
spend Christmas vacation with his aunt, Felicidad Estrada. not valid because:
2. Dec. 26, 1932: Arturo made a written application to Insular a. Beneficiary signed "ACCORD, SATISFACTION AND
Life Assurance Co., Ltd., through its agent, Cristobal RELEASE" document
Mendoza, for a policy of insurance on his life in the sum of b. No delivery of the policy because it was not
P1,000 and he paid to the agent P15 cash as part of the delivered to and accepted by the insured in
first premium. person
3. It was agreed that the policy, if issued, should be delivered c. Policy never took effect because of par. 3 of the
to Estrada with whom Arturo left the sum of P25.06 to application, for at the time of its delivery by the
complete the payment of the first annual premium of agent as aforesaid the insured was not in good
P40.06. health.
4. Jan. 1, 1933: Arturo, 29 y.o., was examined by the
company's doctor who made a favorable report, to the ISSUES
company. WON there was delivery of the policy considering that it was
5. Jan. 2: Arturo went back to work in Manila (linotype not delivered to and accepted by the insured in person – YES.
operator in Bureau of Printing)  Delivery to insured in person is NOT NECESSARY. It may be
6. Jan. 11: Company issued policy No. 47710 dated back to made by mail or to a duly-constituted agent (which in this
December 1, 1932, and mailed it to Mendoza, in Camiling, case was made to Estrada)
Tarlac, for delivery to the insured.
7. Jan. 15, Arturo was suffering from acute nephritis and WON the policy took effect despite Insular’s argument that at
uremia. the time of delivery by the agent, Arturo was not in good
8. Jan. 16: Mendoza received policy which he gave to Estrada condition – YES.
on Jan. 18, upon the latter’s payment of the balance of the  There is one line of cases which holds that stipulation in
1st year’s annual premium. par. 3 is in the nature of CONDITION PRECEDENT – no valid
9. Mendoza asked Estrada if her nephew was in good health delivery unless insured was in good health; and such
and she replied that she believed so because she had no cannot be waived by the agent making the policy
information that he was sick and he thereupon delivered  SC deviated from the prevailing American decisions which
to her the policy. hold that delivery of the policy by the agent to the
10. Jan. 19: Arturo died. insured consummates the contract even though agent
11. Jan. 20: Mendoza learned of the death of Arturo and called knew that insured was not in good health at the time –
on Estrada and asked her to return the policy. But theory being that agent’s knowledge is company’s
Mendoza did not return or offer to return the premium knowledge and his delivery of policy is the company’s
paid. Estrada still gave him the policy. delivery; when the delivery is made notwithstanding this
12. Feb. 4: Insular Life obtained from the beneficiary, Arturo’s knowledge of the defect, the company is deemed to have
wife, her signature to a legal document "ACCORD, waived the defect
SATISFACTION AND RELEASE" whereby in consideration of  SC postulated that it is more consonant with well-known
the sum of P40.06 paid to her by a check of the company, practice of life insurance companies to rest decision on
she "assigns, releases and forever discharges Insular Life proposition that Mendoza was authorized by company to
Assurance of all claims, obligation in or indebtedness. The make the delivery of the policy when he received payment
said check was never cashed and was returned to the of 1st premium and he was satisfied that the insured was
company. in good health, which calls for Mendoza to exercise his
13. Thereupon this action was brought to enforce payment of discretion.
the policy.  As such, Mendoza was duly licensed by the Insurance
14. By the terms of the policy, an annual premium of P40.06 Commissioner to act as the agent of the defendant
is due on the first day of December of each year, the first insurance company. The well-known custom of the
premium already paid by the insured covering the period insurance business and the evidence in this case prove
from December 1, 1932. It is to December 1, 1933. that Mendoza was not regarded by the company as a
15. The application which the insured signed in Camiling, mere conduit or automaton for the performance of the
Tarlac, on December 26, 1932, contained among others physical act of placing the policy in the hands of the
the following provisions: insured.
 It is in the interest not only of the applicant but of all IMPERIAL, J. (dissent)
insurance companies as well that there should be some - "A local agent of an insurance company, whose only power is
act which gives the applicant the definite assurance that to solicit applications for insurance, and forward them to the
the contract has been consummated. company for approval, when, if approved to the insured, has
o A cloud will be thrown over the entire insurance no power to waive any of the provision of the policy so
business if the condition of health of the insured delivered."
at the time of delivery of the policy may be - It is clear, therefore, that the delivery of the policy by
inquired into years afterwards with the view to Mendoza does not bind Insular, nor is Insular estopped from
avoiding the policy on the ground that it never alleging its defense, for the simple reason that Mendoza was
took effect because of an alleged lack of good not an agent with authority to issue policies or to accept risks
health, at the time of delivery in the name of his principle.
 It is also for public interest that SC is constrained to hold -There is another ground upon which the majority opinion is
that the delivery of the policy to the insured by an agent based, namely, that Insular waived the defense it now invokes,
of the company who is authorized to make delivery or by reason of the delivery of the policy by its agent. It is
withhold delivery is the final act which binds the admitted that if the delivery of the policy was due to fraud,
company (and the insured as well) in the absence of legally there could have been no waiver. In view of the facts
fraud or other legal ground for rescission. established and admitted, there is no doubt, as to the
o Fact that the agent is derelict or negligent or even existence of the fraud.
dishonest in the performance of the duty which -Estrada, as a representative of the insured was not only bound
has been entrusted to him would create a liability to give a truthful information on the state of health of the
of the agent to the company but does not resolve insured, but it was her duty to find out it his true state of health
the company's obligation based upon the in order to give true and correct information. When she gave
authorized acts of the agent toward a third party Mendoza an incorrect information tending to create the
who was not in collusion with the agent. impression that the insured was well when in fact he was
 Mendoza's decision that the condition had been met by seriously ill, there is no doubt that she committed fraud and
the insured and that it was proper to make delivery of imparted a deceitful information to the defendant agent
the policy to him is just as binding on the company as if -Beneficiary also made a waiver “ACCORD, SATISFACTION, AND
the decision had been made by its board of directors. RELEASE”
Granted that Mendoza made a mistake of judgment -In conclusion, policy has not produced any effect from which
because he acted on insufficient evidence as to the state the plaintiff may derive any right, and (2) that she has expressly
of health of the insured. But it is not charged that the waived any and all rights accruing from the policy;
mistake was induced by any misconduct or omission of
duty of the insured.

WON policy is valid despite Insular’s argument that Mendoza

made a waiver of the contractual obligation which the latter
had no authority to do so – YES.
 Mendoza neither waived nor pretended to waive any
right or requirement of the company - his inquiry as to
the state of health of the insured discloses that he was
endeavoring to assure himself that the requirement of the
company had been satisfied. In doing so, he acted within
the authority conferred on him by his agency and his acts
within that authority bind the company.

WON Arturo’s wife may claim insurance benefits from Insular

Life– YES.
 The company, having decided that all the conditions
precedent to the taking effect of the policy had been
complied with and having accepted the premium and
delivered the policy thereafter to the insured, the
company is now estopped to assert that it never intended
that the policy should take effect.

RULING: Insular Life assumed the risk covered by Policy No.

47710 on the life of Arturo Sindayen on Jan. 18, 1933, date
when the policy was delivered to the insured. Judgment of CFI
reversed.