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Insurance Law; Insurable Interest; Mortgagor; Real Party in Interest; Transfer of right to sue Great Pacific Life (Grepalife) vs. CA, Leuterio, 316 SCRA 677 (1999) QUISUMBING, J.: Grepalife issued the insurance coverage of Dr. Leuterio, mortgagor of the housing loan of Development Bank of the Philippines (DBP) under the group insurance policy of mortgagors, to the extent of his DBP mortgage indebtedness. The insurer died due to massive cerebral hemorrhage. When DBP submitted the insurance claim against petitioner, the latter denied payment thereof, interposing the defense of concealment committed by the insured. Thereafter, DBP collected the debt from the mortgagor and took the necessary action of foreclosure on the residential lot of private respondent. The widow of the late Dr. Leuterio, respondent Medarda V. Leuterio, filed a complaint against Grepalife for Specific Performance with Damages. May the widow of the decedent-mortgagor file the complaint against the insurer? Yes. In Gonzales La O vs. Yek Tong Lin Fire & Marine Ins. Co. Phil. 386 (1930),Sec. 8 of the Insurance code was applied that although a policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to him, yet the mortgagor may sue thereon in his own name, especially where the mortgagees interest is less than the full amount recoverable under the policy. And under Sec. 181, of the Insurance Code, a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether she has an insurable interest or not, and such person may recover it whatever the insured might have recovered. The widow of the decedent-mortgagor-insured may file the suit against the insurer-petitioner.

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Appellant insurance company had failed to establish that there was concealment made by the insured, hence, it cannot refuse payment of the claim. The insurer was ordered to pay the insurance proceeds to the heirs of Dr. Leuterio since DBP already foreclosed the mortgaged property.