VICENTE E. TANG, PETITIONER, VS. HON. COURT OF APPEALS AND PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, RESPONDENTS.

This is a petition to review on certiorari of the decision of the
Court of Appeals (CA-G.R. No. 55407-R, June 8, 1978)
which affirmed the decision of the Court of First Instance of Manila in Civil
Case No. 90062 wherein the petitioner herein was the plaintiff and Philippine
American Life Insurance Co. the herein respondent was
the defendant.  The action was for the
enforcement of two insurance policies that had been issued by the defendant
company under the following circumstances.

On September 25, 1965,
Lee See Guat, a widow, 61 years old, and an
illiterate who spoke only Chinese, applied for an insurance on her life for P60,000 with the respondent Company.  The application consisted of two parts, both
in the English language.  The second part
of her application dealt with her state of health and because her answers
indicated that she was healthy, the Company issued her Policy No. 0690397,
effective October 23, 1965, with her nephew Vicente E. Tang, herein petitioner,
as her beneficiary.

On November 15, 1965,
Lee See Guat again applied with the respondent
Company for an additional insurance on her life for P40,000.  Considering that her first application had
just been approved, no further medical examination was made but she was
required to accomplish and submit Part I of the application which reads:  “I/WE HEREBY DECLARE AND AGREE that all
questions, statements and answers contained herein, as well as those made to or
to be made to the Medical Examiner in Part II are full, complete and true and
bind all parties in interest under the policy herein applied for; that there
shall be no contract of insurance unless a policy is issued on this application
and the full first premium thereon, according to the mode of payment specified
in answer to question 4D above, actually paid during the lifetime and good
health of the Proposed Insured.” Moreover, her answers in Part II of her
previous application were used in appraising her insurability for the second
insurance.  On November 28, 1965, Policy No. 695632 was issued
to Lee See Guat with the same Vicente E. Tang as her
beneficiary.

On April 20, 1966,
Lee See Guat died of lung cancer.  Thereafter, the beneficiary of the two
policies, Vicente E. Tang claimed for their face value in the amount of P100,000 which the insurance company refused to pay on the
ground that the insured was guilty of concealment and misrepresentation at the
time she applied for the two policies. 
Hence, the filing of Civil Case No. 90062 in the Court of First Instance
of Manila which dismissed the claim because of the concealment practised by the insured in violation of the Insurance Law.

On appeal, the Court of Appeals, affirmed the decision.  In its decision, the Court of Appeals stated,
inter alia:  “There is no doubt that she deliberately
concealed material facts about her physical condition and history and/or
conspired with whoever assisted her in relaying false information to the
medical examiner, assuming that the examiner could not communicate directly
with her.”

The issue in this appeal is the application of Art. 1332 of the
Civil Code which 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.”

According to the Code Commission: “This rule is espe­cially
necessary in the Philippines where unfortunately there is still a fairly large
number of illiterates, and where documents are usually drawn up in English or
Spanish.” (Report of the Code Commission, p. 136.)
Art. 1332 supplements Art. 24 of the Civil Code which provides that “In
all contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the court must be vigilant for his
protection.”

It is the position of the petitioner that because Lee See Guat was illiterate and spoke only Chinese, she could not
be held guilty of concealment of her health history because the applications
for insurance were in English and the insurer has not proved that the terms
thereof had been fully explained to her.

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.  Even if we
were to say that the insurer is the one seeking the performance of the
contracts by avoiding paying the claim, it has to be noted as above stated that
there has been no imputation of mistake or fraud by the illiterate insured
whose personality is represented by her bene­ficiary the petitioner
herein.  In sum, Art. 1332 is
inapplicable to the case at bar. 
Considering the findings of both the CFI and Court of Appeals that the
insured was guilty of concealment as to her state of health, we have to affirm.

WHEREFORE, the decision of the Court of Appeals is hereby
affirmed.  No special pronouncement as to
costs.

SO ORDERED.

Concepcion, Jr., and Santos,
JJ.,
concur.

Antonio, (Actg. Chairman)*, J., concurs
in a separate opinion.

Aquino, J., in the result.

*
Justice Antonio P. Barredo is on leave.

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