Commercial Law

Visitacion Gaw vs Court of Appeals

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G.R. NO. 147748 – 487 SCRA 423 – Mercantile Law – Law on Insurance – Contract of Adhesion – Contract Binds Parties – Pre-Need Plan – when insurance may not pay

Visitacion Gaw bought a transferable pre-need plan from Pacific Plans in 1982. The plan provides that in case of transfer, Pacific Plans have to be informed immediately; that it has the sole and exclusive right to deal with the funeral home; that Gaw has the right to pre-select a casket of her choice.

One morning in 1986, Gaw’s mom died. Gaw chose to transfer the plan to her mom. Gaw’s brother immediately negotiated with a local funeral. Gaw called up Pacific Plans in the evening informing them of her mom’s death. A representative from Pacific Plans went to the funeral parlor but when he was there he found the already embalmed body of Gaw’s mom and a casket has been provided already. Gaw later upgraded the casket to something more expensive as she did not like the cheaper one.

Pacific Plans refused to cover the expenses of the funeral due to alleged violations made by Gaw. Gaw sued Pacific Plans claiming that she incurred damages when she was forced to sell her P150k lot for only P50k so that the funeral expenses will be covered.

ISSUE: Whether or not Pacific Plans should reimburse Gaw.

HELD: No. The pre-need plan is a contract of adhesion which has terms and conditions unilaterally prepared by Pacific Plans on a take it or leave it basis. Gaw agreed to the terms and conditions hence she is bound by these terms and conditions. The fact that she did not inform Pacific Plans of her mom’s death immediately, that it was not Pacific Plans who dealt with the funeral homes, that she upgraded the casket violated the agreement in the plan, hence there is no reimbursement.

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