Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 113899 October 13, 1999
GREAT PACIFIC LIFE ASSURANCE CORP., petitioner,
vs.
COURT OF APPEALS AND MEDARDA V. LEUTERIO, respondents.
QUISUMING, J.:
his petition for revie!, under Rule "# of the Rules of Court, assails the
Decision
1
dated Ma$ %&, %''(, of the Court of )ppeals and its Resolution
!
dated
*anuar$ ", %''" in C)+,.R. CV No. %-("%. he appellate court a.r/ed in toto the
0ud1/ent of the Misa/is Oriental Re1ional rial Court, 2ranch %-, in an insurance
clai/ 3led b$ private respondent a1ainst ,reat Paci3c 4ife )ssurance Co. he
dispositive portion of the trial court5s decision reads6
78ERE9ORE, 0ud1/ent is rendered ad0ud1in1 the defendant
,RE) P)CI9IC 4I9E )SS:R)NCE CORPOR)ION as insurer under
its ,roup polic$ No. ,+%';&, in relation to Certi3cation 2+%-##-
liable and ordered to pa$ to the DEVE4OPMEN 2)N< O9 8E
P8I4IPPINES as creditor of the insured Dr. 7ilfredo 4euterio, the
a/ount of EI,8= SI> 8O:S)ND 7O 8:NDRED PESOS
?P-@,A;;.;;BC dis/issin1 the clai/s for da/a1es, attorne$5s fees
and liti1ation eDpenses in the co/plaint and counterclai/, !ith
costs a1ainst the defendant and dis/issin1 the co/plaint in
respect to the plaintiEs, other than the !ido!+bene3ciar$, for lacF
of cause of action.
3
he facts, as found b$ the Court of )ppeals, are as follo!s6
) contract of 1roup life insurance !as eDecuted bet!een petitioner ,reat Paci3c 4ife
)ssurance Corporation ?hereinafter ,repalifeB and Develop/ent 2anF of the
Philippines ?hereinafter D2PB. ,repalife a1reed to insure the lives of eli1ible housin1
loan /ort1a1ors of D2P.
On Nove/ber %%, %'-(, Dr. 7ilfredo 4euterio, a ph$sician and a housin1 debtor of
D2P applied for /e/bership in the 1roup life insurance plan. In an application for/,
Dr. 4euterio ans!ered Guestions concernin1 his health condition as follo!s6
&. 8ave $ou ever had, or consulted, a ph$sician for a heart
condition, hi1h blood pressure, cancer, diabetes, lun1C Fidne$ or
sto/ach disorder or an$ other ph$sical i/pair/entH
)ns!er6 No. If so 1ive details IIIIIIIIIIIII.
-. )re $ou no!, to the best of $our Fno!led1e, in 1ood healthH
)ns!er6 JDK =es J K NO.
"
On Nove/ber %#, %'-(, ,repalife issued Certi3cate No. 2+%-##-, as insurance
covera1e of Dr. 4euterio, to the eDtent of his D2P /ort1a1e indebtedness a/ountin1
to ei1ht$+siD thousand, t!o hundred ?P-@,A;;.;;B pesos.1wphi1.nt
On )u1ust @, %'-", Dr. 4euterio died due to L/assive cerebral he/orrha1e.L
ConseGuentl$, D2P sub/itted a death clai/ to ,repalife. ,repalife denied the clai/
alle1in1 that Dr. 4euterio !as not ph$sicall$ health$ !hen he applied for an
insurance covera1e on Nove/ber %#, %'-(. ,repalife insisted that Dr. 4euterio did
not disclose he had been suEerin1 fro/ h$pertension, !hich caused his death.
)lle1edl$, such non+disclosure constituted conceal/ent that 0usti3ed the denial of
the clai/.
On October A;, %'-@, the !ido! of the late Dr. 4euterio, respondent Medarda V.
4euterio, 3led a co/plaint !ith the Re1ional rial Court of Misa/is Oriental, 2ranch
%-, a1ainst ,repalife for LSpeci3c Perfor/ance !ith Da/a1es.L
#
Durin1 the trial, Dr.
8ernando Me0ia, !ho issued the death certi3cate, !as called to testif$. Dr. Me0ia5s
3ndin1s, based partl$ fro/ the infor/ation 1iven b$ the respondent !ido!, stated
that Dr. 4euterio co/plained of headaches presu/abl$ due to hi1h blood pressure.
he inference !as not conclusive because Dr. 4euterio !as not autopsied, hence,
other causes !ere not ruled out.
On 9ebruar$ AA, %'--, the trial court rendered a decision in favor of respondent
!ido! and a1ainst ,repalife. On Ma$ %&, %''(, the Court of )ppeals sustained the
trial court5s decision. 8ence, the present petition. Petitioners interposed the
follo!in1 assi1ned errors6
%. 8E 4O7ER CO:R ERRED IN 8O4DIN, DE9END)N+)PPE44)N 4I)24E O
8E DEVE4OPMEN 2)N< O9 8E P8I4IPPINES ?D2PB 78IC8 IS NO ) P)R= O
8E C)SE 9OR P)=MEN O9 8E PROCEEDS O9 ) MOR,),E REDEMPION
INS:R)NCE ON 8E 4I9E O9 P4)INI995S 8:S2)ND 7I49REDO 4E:ERIO ONE
O9 IS 4O)N 2ORRO7ERS, INSE)D O9 DISMISSIN, 8E C)SE ),)INS
DE9END)N+)PPE44)N JPetitioner ,repalifeK 9OR 4)C< O9 C):SE O9 )CION.
A. 8E 4O7ER CO:R ERRED IN NO DISMISSIN, 8E C)SE 9OR 7)N O9
*:RISDICION OVER 8E S:2*EC OR N):RE O9 8E )CION )ND OVER 8E
PERSON O9 8E DE9END)N.
(. 8E 4O7ER CO:R ERRED IN ORDERIN, DE9END)N+)PPE44)N O P)= O
D2P 8E )MO:N O9 P-@,A;;.;; IN 8E )2SENCE O9 )N= EVIDENCE O S8O7
8O7 M:C8 7)S 8E )C:)4 )MO:N P)=)24E O D2P IN )CCORD)NCE 7I8
IS ,RO:P INS:R)NCE CONR)C 7I8 DE9END)N+)PPE44)N.
". 8E 4O7ER CO:R ERRED IN 8O4DIN, 8) 8ERE 7)S NO CONCE)4MEN
O9 M)ERI)4 IN9ORM)ION ON 8E P)R O9 7I49REDO 4E:ERIO IN 8IS
)PP4IC)ION 9OR MEM2ERS8IP IN 8E ,RO:P 4I9E INS:R)NCE P4)N 2E7EEN
DE9END)N+)PPE44)N O9 8E INS:R)NCE C4)IM )RISIN, 9ROM 8E DE)8
O9 7I49REDO 4E:ERIO.
$
S$nthesiMed belo! are the assi1ned errors for our resolution6
%. 7hether the Court of )ppeals erred in holdin1 petitioner liable to D2P as
bene3ciar$ in a 1roup life insurance contract fro/ a co/plaint 3led b$ the
!ido! of the decedentN/ort1a1orH
A. 7hether the Court of )ppeals erred in not 3ndin1 that Dr. 4euterio concealed
that he had h$pertension, !hich !ould vitiate the insurance contractH
(. 7hether the Court of )ppeals erred in holdin1 ,repalife liable in the a/ount
of ei1ht$ siD thousand, t!o hundred ?P-@,A;;.;;B pesos !ithout proof of the
actual outstandin1 /ort1a1e pa$able b$ the /ort1a1or to D2P.
Petitioner alle1es that the co/plaint !as instituted b$ the !ido! of Dr. 4euterio, not
the real part$ in interest, hence the trial court acGuired no 0urisdiction over the case.
It ar1ues that !hen the Court of )ppeals a.r/ed the trial court5s 0ud1/ent,
,repalife !as held liable to pa$ the proceeds of insurance contract in favor of D2P,
the indispensable part$ !ho !as not 0oined in the suit.
o resolve the issue, !e /ust consider the insurable interest in /ort1a1ed
properties and the parties to this t$pe of contract. he rationale of a 1roup insurance
polic$ of /ort1a1ors, other!ise Fno!n as the L/ort1a1e rede/ption insurance,L is a
device for the protection of both the /ort1a1ee and the /ort1a1or. On the part of
the /ort1a1ee, it has to enter into such for/ of contract so that in the event of the
uneDpected de/ise of the /ort1a1or durin1 the subsistence of the /ort1a1e
contract, the proceeds fro/ such insurance !ill be applied to the pa$/ent of the
/ort1a1e debt, thereb$ relievin1 the heirs of the /ort1a1or fro/ pa$in1 the
obli1ation.
%
In a si/ilar vein, a/ple protection is 1iven to the /ort1a1or under such
a concept so that in the event of deathC the /ort1a1e obli1ation !ill be eDtin1uished
b$ the application of the insurance proceeds to the /ort1a1e
indebtedness.
8
ConseGuentl$, !here the /ort1a1or pa$s the insurance pre/iu/
under the 1roup insurance polic$, /aFin1 the loss pa$able to the /ort1a1ee, the
insurance is on the /ort1a1or5s interest, and the /ort1a1or continues to be a part$
to the contract. In this t$pe of polic$ insurance, the /ort1a1ee is si/pl$ an
appointee of the insurance fund, such loss+pa$able clause does not /aFe the
/ort1a1ee a part$ to the contract.
9
Sec. - of the Insurance Code provides6
:nless the polic$ provides, !here a /ort1a1or of propert$ eEects
insurance in his o!n na/e providin1 that the loss shall be pa$able
to the /ort1a1ee, or assi1ns a polic$ of insurance to a /ort1a1ee,
the insurance is dee/ed to be upon the interest of the /ort1a1or,
!ho does not cease to be a part$ to the ori1inal contract, and an$
act of his, prior to the loss, !hich !ould other!ise avoid the
insurance, !ill have the sa/e eEect, althou1h the propert$ is in
the hands of the /ort1a1ee, but an$ act !hich, under the contract
of insurance, is to be perfor/ed b$ the /ort1a1or, /a$ be
perfor/ed b$ the /ort1a1ee therein na/ed, !ith the sa/e eEect
as if it had been perfor/ed b$ the /ort1a1or.
he insured private respondent did not cede to the /ort1a1ee all his ri1hts or
interests in the insurance, the polic$ statin1 that6 LIn the event of the debtor5s death
before his indebtedness !ith the Creditor JD2PK shall have been full$ paid, an
a/ount to pa$ the outstandin1 indebtedness shall 3rst be paid to the creditor and
the balance of su/ assured, if there is an$, shall then be paid to the bene3ciar$Nies
desi1nated b$ the debtor.L
1&
7hen D2P sub/itted the insurance clai/ a1ainst
petitioner, the latter denied pa$/ent thereof, interposin1 the defense of
conceal/ent co//itted b$ the insured. hereafter, D2P collected the debt fro/ the
/ort1a1or and tooF the necessar$ action of foreclosure on the residential lot of
private respondent.
11
In Gonzales La O vs. Yek Tong Lin Fire & Marine Ins. o.
1!
!e
held6
Insured, bein1 the person !ith !ho/ the contract !as /ade, is
pri/aril$ the proper person to brin1 suit thereon. ' ' ' Sub0ect to
so/e eDceptions, insured /a$ thus sue, althou1h the polic$ is
taFen !holl$ or in part for the bene3t of another person na/ed or
unna/ed, and althou1h it is eDpressl$ /ade pa$able to another as
his interest /a$ appear or other!ise. ' ' ' )lthou1h a polic$
issued to a /ort1a1or is taFen out for the bene3t of the
/ort1a1ee and is /ade pa$able to hi/, $et the /ort1a1or /a$
sue thereon in his o!n na/e, especiall$ !here the /ort1a1ee5s
interest is less than the full a/ount recoverable under the polic$, '
' '.
)nd in volu/e ((, pa1e -A, of the sa/e !orF, !e read the
follo!in16
Insured /a$ be re1arded as the real part$ in interest, althou1h he
has assi1ned the polic$ for the purpose of collection, or has
assi1ned as collateral securit$ an$ 0ud1/ent he /a$ obtain.
13
)nd since a polic$ of insurance upon life or health /a$ pass b$ transfer, !ill or
succession to an$ person, !hether he has an insurable interest or not, and such
person /a$ recover it !hatever the insured /i1ht have recovered,
1"
the !ido! of
the decedent Dr. 4euterio /a$ 3le the suit a1ainst the insurer, ,repalife.
he second assi1ned error refers to an alle1ed conceal/ent that the petitioner
interposed as its defense to annul the insurance contract. Petitioner contends that
Dr. 4euterio failed to disclose that he had h$pertension, !hich /i1ht have caused his
death. Conceal/ent eDists !here the assured had Fno!led1e of a fact /aterial to
the risF, and honest$, 1ood faith, and fair dealin1 reGuires that he should
co//unicate it to the assured, but he desi1nedl$ and intentionall$ !ithholds the
sa/e.
1#
Petitioner /erel$ relied on the testi/on$ of the attendin1 ph$sician, Dr. 8ernando
Me0ia, as supported b$ the infor/ation 1iven b$ the !ido! of the decedent.
,repalife asserts that Dr. Me0ia5s technical dia1nosis of the cause of death of Dr.
4euterio !as a dul$ docu/ented hospital record, and that the !ido!5s declaration
that her husband had Lpossible h$pertension several $ears a1oL should not be
considered as hearsa$, but as part of res gestae.
On the contrar$ the /edical 3ndin1s !ere not conclusive because Dr. Me0ia did not
conduct an autops$ on the bod$ of the decedent. )s the attendin1 ph$sician, Dr.
Me0ia stated that he had no Fno!led1e of Dr. 4euterio5s an$ previous hospital
con3ne/ent.
1$
Dr. 4euterio5s death certi3cate stated that h$pertension !as onl$
Lthe possible cause of death.L he private respondent5s state/ent, as to the /edical
histor$ of her husband, !as due to her unreliable recollection of events. 8ence, the
state/ent of the ph$sician !as properl$ considered b$ the trial court as hearsa$.
he Guestion of !hether there !as conceal/ent !as aptl$ ans!ered b$ the
appellate court, thus6
he insured, Dr. 4euterio, had ans!ered in his insurance
application that he !as in 1ood health and that he had not
consulted a doctor or an$ of the enu/erated ail/ents, includin1
h$pertensionC !hen he died the attendin1 ph$sician had certi3ed
in the death certi3cate that the for/er died of cerebral
he/orrha1e, probabl$ secondar$ to h$pertension. 9ro/ this
report, the appellant insurance co/pan$ refused to pa$ the
insurance clai/. )ppellant alle1ed that the insured had concealed
the fact that he had h$pertension.
Contrar$ to appellant5s alle1ations, there !as no su.cient proof
that the insured had suEered fro/ h$pertension. )side fro/ the
state/ent of the insured5s !ido! !ho !as not even sure if the
/edicines taFen b$ Dr. 4euterio !ere for h$pertension, the
appellant had not proven nor produced an$ !itness !ho could
attest to Dr. 4euterio5s /edical histor$ . . .
DDD DDD DDD
)ppellant insurance co/pan$ had failed to establish that there
!as conceal/ent /ade b$ the insured, hence, it cannot refuse
pa$/ent of the clai/.
1%
he fraudulent intent on the part of the insured /ust be established to entitle the
insurer to rescind the contract.
18
Misrepresentation as a defense of the insurer to
avoid liabilit$ is an a.r/ative defense and the dut$ to establish such defense b$
satisfactor$ and convincin1 evidence rests upon the insurer.
19
In the case at bar, the
petitioner failed to clearl$ and satisfactoril$ establish its defense, and is therefore
liable to pa$ the proceeds of the insurance.1wphi1.nt
)nd that brin1s us to the last point in the revie! of the case at bar. Petitioner clai/s
that there !as no evidence as to the a/ount of Dr. 4euterio5s outstandin1
indebtedness to D2P at the ti/e of the /ort1a1or5s death. 8ence, for private
respondent5s failure to establish the sa/e, the action for speci3c perfor/ance
should be dis/issed. Petitioner5s clai/ is !ithout /erit. ) life insurance polic$ is a
valued polic$.
!&
:nless the interest of a person insured is susceptible of eDact
pecuniar$ /easure/ent, the /easure of inde/nit$ under a polic$ of insurance upon
life or health is the su/ 3Ded in the polic$.
!1
he /ort1a1or paid the pre/iu/
accordin1 to the covera1e of his insurance, !hich states that6
he polic$ states that upon receipt of due proof of the Debtor5s
death durin1 the ter/s of this insurance, a death bene3t in the
a/ount of P-@,A;;.;; shall be paid.
In the event of the debtor5s death before his indebtedness !ith the
creditor shall have been full$ paid, an a/ount to pa$ the
outstandin1 indebtedness shall 3rst be paid to the Creditor and
the balance of the Su/ )ssured, if there is an$ shall then be paid
to the bene3ciar$Nies desi1nated b$ the debtor.L
!!
?E/phasis
o/ittedB
8o!ever, !e noted that the Court of )ppeals5 decision !as pro/ul1ated on Ma$ %&,
%''(. In private respondent5s /e/orandu/, she states that D2P foreclosed in %''#
their residential lot, in satisfaction of /ort1a1or5s outstandin1 loan. Considerin1 this
supervenin1 event, the insurance proceeds shall inure to the bene3t of the heirs of
the deceased person or his bene3ciaries. EGuit$ dictates that D2P should not
un0ustl$ enrich itself at the eDpense of another ?Ne!o "#! alteri#s $etri!enio
protestB. 8ence, it cannot collect the insurance proceeds, after it alread$ foreclosed
on the /ort1a1e. he proceeds no! ri1htl$ belon1 to Dr. 4euterio5s heirs
represented b$ his !ido!, herein private respondent Medarda 4euterio.
78ERE9ORE, the petition is hereb$ DENIED. he Decision and Resolution of the
Court of )ppeals in C)+,.R. CV %-("% is )99IRMED !ith MODI9IC)ION that the
petitioner is ORDERED to pa$ the insurance proceeds a/ountin1 to Ei1ht$+siD
thousand, t!o hundred ?P-@,A;;.;;B pesos to the heirs of the insured, Dr. 7ilfredo
4euterio ?deceasedB, upon presentation of proof of prior settle/ent of /ort1a1or5s
indebtedness to Develop/ent 2anF of the Philippines. Costs a1ainst
petitioner.1wphi1.nt
SO ORDERED.
Gre()*+,e -. CA /C).e r+e,0
F)ct.1 ) contract of 1roup life insurance !as eDecuted bet!een ,repalife and D2P.
he for/er a1reed to insure the lives of eli1ible housin1 loan /ort1a1ors of D2P. Dr.
4euterio applied /e/bership in the 1roup life insurance plan. 8e ans!ered in
the application for/that he has never consulted a ph$sician for heart condition, hi1h
blood pressure, cancer, diabetes, lun1, Fidne$, or sto/ach disorder or an$ other
ph$sical i/pair/ent, and that to the best of his Fno!led1e he is in 1ood condition.
Durin1 the subsistence of the insurance he died fro/ /assive cerebral he/orrha1e.
,repalife denied the clai/ because of conceal/ent since it !as discovered that he
had hi1h blood. 8is !ido! 3led a clai/.
I..2e1 7hether or not there !as /isrepresentaion so as to !arrant denial of clai/C
7hether or not the !ido! of 4euterio is a real part$ in interest
3e*41 he Supre/e Court ruled that there !as no su.cient proof that the insured
suEered fro/ h$pertension. It is a !ell+settled ruled that the fraudulent intent on the
part of the insured /ust be established to entitle the insurer to rescind the contract.
)s re1ards the second issue, the !ido! can be re1arded as real part$ in interest
because in /ort1a1e rede/ption insurance the /ort1a1or and not the /ort1a1ee is
the contractin1 part$. he /ort1a1or /erel$ assi1ns the proceeds to the /ort1a1ee.
herefore, since b$ principle of succession the !ido! /a$ clai/.
GREAT PACIFIC LIFE ASSURANCE COMPAN5 -.. 3ONORALE COURT OF
APPEALS
,.R. No. 4+(%-"#
)pril (;, %'&'
9)CS6 Private respondent N1o 8in1 3led an application !ith the ,reat Paci3c 4ife
)ssurance Co/pan$ on the life of his one+$ear old dau1hter 8elen ,o. :pon the
pa$/ent of the insurance pre/iu/ to 4apulapu D. Mondra1on, 2ranch Mana1er of
the Paci3c 4ife, the bindin1 deposit receipt !as issued to private respondent N1o
8in1. Mondra1on received a letter fro/ Paci3c 4ife disapprovin1 the insurance
application. he non+acceptance of the insurance plan b$ Paci3c 4ife !as not
co//unicated b$ petitioner Mondra1on to private respondent N1o 8in1. 8elen ,o
died of inOuenMa !ith co/plication of bronchopneu/onia. hereupon, private
respondent sou1ht the pa$/ent of the proceeds of the insurance, but havin1 failed
in his eEort, he 3led the action for the recover$ of the sa/e.
ISS:ES6 ?%B !hether the bindin1 deposit receipt ?EDhibit EB constituted a te/porar$
contract of the life insurance in GuestionC and ?AB !hether private respondent N1o
8in1 concealed the state of health and ph$sical condition of 8elen ,o, !hich
rendered void the aforesaid EDhibit E.
8E4D6 he bindin1 deposit receipt in Guestion is /erel$ an acFno!led1/ent, on
behalf of the co/pan$, that the latter5s branch o.ce had received fro/ the
applicant the insurance pre/iu/ and had accepted the application sub0ect for
processin1 b$ the insurance co/pan$C and that the latter !ill either approve or
re0ect the sa/e on the basis of !hether or not the applicant is Linsurable on
standard rates.L Since petitioner Paci3c 4ife disapproved the insurance application of
respondent N1o 8in1, the bindin1 deposit receipt in Guestion had never beco/e in
force at an$ ti/e. In life insurance, a Lbindin1 slipL or Lbindin1 receiptL does not
insure b$ itself.
Private respondent had deliberatel$ concealed the state of health and ph$sical
condition of his dau1hter 8elen ,o. 7hen private respondent supplied the reGuired
essential data for the insurance application for/, he !as full$ a!are that his one+
$ear old dau1hter is t$picall$ a /on1oloid child. Such a con1enital ph$sical defect
could never be ensconced nor dis1uised. Nonetheless, private respondent, in
apparent bad faith, !ithheld the fact /aterial to the risF to be assu/ed b$ the
insurance co/pan$. )s an insurance a1ent of Paci3c 4ife, he ou1ht to Fno!, as he
surel$ /ust have Fno!n his dut$ and responsibilit$ to such a /aterial fact. 8ad he
dia/ond said si1ni3cant fact in the insurance application for/ Paci3c 4ife !ould
have veri3ed the sa/e and !ould have had no choice but to disapprove the
application outri1ht.
No insurance contract !as perfected bet!een the parties !ith the nonco/pliance of
the conditions provided in the bindin1 receipt, and conceal/ent, as le1all$ de3ned,
havin1 been co//itted b$ private respondent.