Tan v. CA - Rescission of the contract of insurance

174 SCRA 403

Facts:

>  Tan Lee Siong was issued a policy by Philamlife on Nov. 6, 1973.

>  On Aprl 26, 1975, Tan died of hepatoma.  His beneficiaries then filed a claim with Philamlife for the proceeds of the insurance.

>  Philamlife wrote the beneficiaries in Sep. 1975 denying their claim and rescinding the contract on the ground of misrepresentation.  The beneficiaries contend that Philamlife can no longer rescind the contract on the ground of misrepresentation as rescission must allegedly be done “during the lifetime of the insured” within two years and prior to the commencement of the action following the wording of Sec. 48, par. 2.

Issue:

Whether or not Philamlife can rescind the contract.

Held:

YES.

The phrase “during the lifetime” found in Sec. 48 simply means that the policy is no longer in force after the insured has died.  The key phrase in the second paragraph is “for a period of two years”.

What is a simpler illustration of the ruling in Tan v. CA?

The period to consider in a life insurance poiicy is “two years” from the date of issue or of the last reinstatement.  So if for example the policy was issued/reinstated on Jan 1, 2000, the insurer can still exercise his right to rescind up to Jan. 1, 2003 or two years from the date of issue/reinstatement, REGARDLESS of whether the insured died before or after Jan. 1, 2003.