Cases in Insurance I declare on behalf of myself and of any person who shall have or claim any interest in any

policy issued hereunder, that each of the above answers is full, complete and true, and that to
EIGHTH MEETING the best of my knowledge and belief I am a proper subject for life insurance. (Exhibit K.)

The false answer above referred to, as well as the others, was written by the Company's soliciting agent
I. Representation Romulo M. David, in collusion with the medical examiner Dr. Gregorio Valdez, for the purpose of securing
the Company's approval of the application so that the policy to be issued thereon might be credited to
said agent in connection with the inter-provincial contest which the Company was then holding among
its soliciting agents to boost the sales of its policies. Agent David bribed Medical Examiner Valdez with
G.R. No. L-47593 December 29, 1943 money which the former borrowed from the applicant's mother by way of advanced payment on the
premium, according to the finding of the Court of Appeals. Said court also found that before the insured
THE INSULAR LIFE ASSURANCE CO., LTD., petitioner, signed the application he, as well as the members of his family, told the agent and the medical examiner
vs. that he had been sick and coughing for some time and that he had gone three times to the Santol
SERAFIN D. FELICIANO ET AL., respondents. Sanatorium and had X-ray pictures of his lungs taken; but that in spite of such information the agent
and the medical examiner told them that the applicant was a fit subject for insurance.

Manuel Roxas and Araneta, Zaragoza, Araneta and Bautista for petitioner.
Deflfin Joven and Pablo Lorenzo for respondents. Each of the policies sued upon contains the following stipulations:
Ramirez and Ortigas as amici curiae.
This policy and the application herefor constitute the entire contract between the parties
hereto. . . . Only the President, or the Manager, acting jointly with the Secretary or Assistant
Secretary (and then only in writing signed by them) have power in behalf of the Company to
issue permits, or to modify this or any contract, or to extend the same time for making any
premium payment, and the Company shall not be bound by any promise or representation
OZAETA, J.: heretofore or hereafter given by any person other than the above-named officials, and by them
only in writing and signed conjointly as stated.
In a four-to-three decision promulgated on September 13, 1941, 1 this Court affirmed the judgment of
the Court of Appeals in favor of the respondents and against the petitioner for the sum of P25,000, The application contains, among others, the following statements:
representing the value of two insurance policies issued by the petitioner on the life of Evaristo Feliciano.
A motion to reconsider and set aside said decision has been filed by the petitioner, and both parties
have submitted exhaustive and luminous written arguments in support of their respective contentions. 18. — I [the applicant] hereby declare that all the above statements and answers as well as
all those that I may make to the Company's Medical Examiner in continuation of this
application, to be complete, true and correct to the best of my knowledge and belief, and I
The facts of the case are set forth in the majority and dissenting opinions heretofore handed down by hereby agree as follows:
this Court, the salient points of which may be briefly restated as follows:

Evaristo Feliciano, who died on September 29, 1935, was suffering with advanced pulmonary
tuberculosis when he signed his applications for insurance with the petitioner on October 12, 1934. On
that same date Doctor Trepp, who had taken X-ray pictures of his lungs, informed the respondent Dr.
Serafin D. Feliciano, brother of Evaristo, that the latter "was already in a very serious ad practically
hopeless condition." Nevertheless the question contained in the application — "Have you ever suffered
from any ailment or disease of the lungs, pleurisy, pneumonia or asthma?" — appears to have been
answered , "No" And above the signature of the applicant, following the answers to the various questions
propounded to him, is the following printed statement:1awphil.net
1. That his declaration, with the answers to be given by me to the Medical Examiner, shall be
the basis of the policy and form part of same.
xxx xxx xxx
3. That the said policy shall not take effect until the first premium has been paid and the policy
has been delivered to and accepted by me, while I am in good health.
4. That the agent taking this application has no authority to make, modify or discharge
contracts, or to waive any of the Company's rights or requirements.
 5. My acceptance of any policy issued on this application will constitute a ratification by me of faith — upon the oral representation of said agent and medical examiner that he (the applicant) was a
any corrections in or additions to this application made by the Company in the space provided fit subject for insurance notwithstanding that he had been and was still suffering with advanced
"For Home Office Corrections or Additions Only." I agree that photographic copy of this pulmonary tuberculosis.
applications as corrected or added to shall constitute sufficient notice to me of the changes
made. (Emphasis added.)
From all the facts and circumstances of this case, we are constrained to conclude that the insured was
a coparticipant, and coresponsible with Agent David and Medical Examiner Valdez, in the fraudulent
The petitioner insists that upon the facts of the case the policies in question are null and void ab initio procurement of the policies in question and that by reason thereof said policies are void ab initio.
and that all that the respondents are entitled to is the refund of the premiums paid thereon. After a
careful re-examination of the facts and the law, we are persuaded that petitioner's contention is correct.
Wheretofore, the motion for reconsideration is sustained and the judgment of the Court of Appeals is
To the reasons adduced in the dissenting opinion heretofore published, we only desire to add the
hereby reversed. Let another judgment be entered in favor of the respondents and against the petitioner
following considerations:
for the refund of the premiums amounting to P1,389, with legal interest thereon from the date of the
complaint, and without any finding as to costs.
When Evaristo Feliciano, the applicant for insurance, signed the application in blank and authorized the
soliciting agent and/or medical examiner of the Company to write the answers for him, he made them
Moran, Paras and Bocobo, JJ., concur.
his own agents for that purpose, and he was responsible for their acts in that connection. If they falsified
the answers for him, he could not evade the responsibility for he falsification. He was not supposed to
sign the application in blank. He knew that the answers to the questions therein contained would be
"the basis of the policy," and for that every reason he was required with his signature to vouch for truth
thereof. Separate Opinions

Moreover, from the facts of the case we cannot escape the conclusion that the insured acted in
connivance with the soliciting agent and the medical examiner of the Company in accepting the policies
in question. Above the signature of the applicant is the printed statement or representation: " . . . I am
a proper subject for life insurance." In another sheet of the same application and above another
signature of the applicant was also printed this statement: "That the said policy shall not take effect
until he first premium has been paid and the policy as been delivered to and accepted by me, while I
am in good health." When the applicant signed the application he was "having difficulty in breathing, .
. . with a very high fever." He had gone three times to the Santol Sanatorium and had X-ray pictures
taken of his lungs. He therefore knew that he was not "a proper subject for life insurance." When he
accepted the policy, he knew that he was not in good health. Nevertheless, he not only accepted the
first policy of P20,000 but then and there applied for and later accepted another policy of P5,000.
YULO, C.J., concurring:
I can find no quarrel with the legal considerations and conclusions set forth in the original decision
promulgated by this Court. As general rules of law they find full support not only in reason and in logic,
but also in simple human sense of justice. More so, modern and complicated practices attendant to the
ever growing trade in life insurance demand the strictest accountability by insurance companies for acts
of their authorized agents. In this way only may the State afford reasonable protection to the unwary
public from abuse by such organizations as may be found to be of questionable moral standards.

We cannot bring ourselves to believe that the insured did not take the trouble to read the answers
contained in the photostatic copy of the application attached to and made a part of the policy before he
accepted it and paid the premium thereon. He must have notice that the answers to the questions
therein asked concerning his clinical history were false, and yet he accepted the first policy and applied
for another. In any event, he obligated himself to read the policy when he subscribed to this statement:
"My acceptance of any policy issued on this application will constitute a ratification by me of any
corrections in or additions to this application made by the Company . . ." By accepting the policy he
became charged with knowledge of its contents, whether he actually read it or not. He could not ostrich-
like hide his head from it in order to avoid his part of the bargain and at the same time claim the benefit
thereof. He knew, or was chargeable with knowledge, from the very terms of the two policies sued upon
(one of which is printed in English and the other in Spanish) that the soliciting agent and the medical
examiner had no power to bind the Company by any verbal promise or oral representation. The insured,
therefore, had no right to rely — and we cannot believe he relied in good faith — upon the oral
representation. The insured, therefore, had no right to rely — and we cannot believe he relied in good
But a careful consideration of the evidentiary facts as set forth in the decision of the Court of Appeals
leads me to conclude that the ends of justice would not be serve by the application to the present case
of the rules so enunciated. Rather, to serve the ends of justice the case of the respondents should be
removed from the protection of such rules.
The subject of the insurance policies under consideration is the life of the assured. It is contended by
his beneficiaries that they took these policies on the basis of a life expectancy of a person gravely
stricken with tuberculosis. They have consistently made protestations that they had so informed the
agents of the insurance company. But the policies were issued upon the life of the assured, as a perfectly
normal and healthy person. The error is vital and goes to the very existence of the contract itself. Who
is responsible for the error?
The direct cause, of course, is the false recitals in the application for insurance. While it is true that it
was the agents of the insurance company who filled out such application, yet it was the assured who,
by signing the application in blank, made it possible for the said agents to procure the issuance of the
policies on the basis of false information, in order to suit their own purposes. Upon the admitted facts,
I am of the opinion that in justice and in equity, the responsibility for the falsifications made by the
insurance agents in the preparation of the insurance application should be laid at the door of the assured
and his beneficiaries.
I vote with the majority in granting the motion for reconsideration and in reversing the decision under
review.
HONTIVEROS, J., dissenting:
The reasons given in the dissenting opinion in this case, as published in the Official Gazette of October
4, 1941 (pp. 2847 to 2855), supplemented by those in the resolution of the majority on the motion for
reconsideration, do not seem to me sufficient to overthrow the decision rendered by the Court of First
Instance, confirmed by the Court of Appeals, and sustained by this Supreme court in its decision of
September 18, 1941. The alleged connivance between the insured Evaristo Feliciano, the agent Romulo
M. David, and the medical examiner Dr. Gregorio Valdez not only does not clearly appear of record, but
on the contrary is denied in the finding of facts of the court a quo and of the Court of Appeals which
cannot be reviewed or altered by this Court.
The mere fact that the insured signed at the bottom of the application for insurance when some of its
lines intended for answers to certain questions were still in blank, answers which according to the
evidence and to the findings of the two inferior courts he had grounds to believe will be made in
accordance with the information which he and his family had given to agent David and to Dr. Valdez,
does not convert these two persons into agents of the insured in a way as to make the latter responsible
for the acts of the former. That the photostatic copies of said forms which are attached to the policies
object of this case are almost illegible, is a fact which should be taken into account, together with the
other fact that Evaristo Feliciano does not know English, the language in which those documents are
written. In support of this dissenting opinion, the following authorities may be cited:
The mere failure of the insured to inform himself of the insertion of false answers in the
application which has been filled out by the agent of the insurer does not convict him of lack
of good faith. (Vol. 5, Cooley's Briefs on Insurance, 2nd Ed., p. 4136, and many cases cited.)
The insured is not chargeable with such negligence as will render him liable for false answers
inserted by the agent merely because he signed the application in blank and trusted the agent
to fill out by the agent, without reading it. (Id., p. 4136, and many cases cited.)
An illiterate person or one who does not understand the English language (as is the case with
Evaristo Feliciano) is not guilty of inexcusable negligence in failing to read the application or
having it read to him, nor can it be said that such person deliberately made a false statement
because he did not read over the application. (81 ALR 865, 866, W. 117 ALR 796.)
Nor can it be said that the assured, who has fully, frankly, truthfully, and in good faith answered
all the required questions, is guilty of negligence in signing, without reading, the application
which is thereupon prepared by the agent. He is justified in assuming that the agent, has, with
equal good faith, truthfully recorded the answers give. He may well say to the Company: 'You
accredited this man to me as your representative, and I signed the application thus prepared
by him, relying upon the character which you gave him, when you commissioned him to come
to me as your agent. If he acted dishonestly in the matter, you, and not I, must suffer the
consequences . . .! (Germania Life Ins. Co. vs. Lunkeheimer [1931] Ind., 538; 26 N. E., 1052)
In such case the acceptance of the policy, with this application attached, does not require the
insured to institute an investigation into its provisions, or the conditions upon which is was
issued, to ascertain whether the agent has acted in good faith, since, under such
circumstances, the insured may rely upon the presumption that he has been honestly dealt
with the insurer. (Otto vs. Hartford Ins. Co., 38 Minn., 423).
Besides, the principles that the insured is not bound to know the contents of the application,
and may rely on the agent's assurances that his answers have been correctly written will, of
course, apply with special force where the insured is illiterate and unable to read, or is ignorant
of the language. (Vol. 5, Cooley's Briefs on Insurance, 2nd Ed. p. 4138, cases cited.)
And also where the photostatic copies of the application embodied in the policy are practically
illegible, the insured is not bound to know the contents of the application. (New York Ins.
Co. vs. Holpem D.C. 57 Fed. 2nd, 200).
According to the great weight of authority, if an agent of the insurer, after obtaining from an
applicant for insurance a correct and truthful answer to interrogations contained in the
application for insurance, without knowledge of the applicant fills in false answers, either
fraudulently or otherwise, the insurer cannot assert the falsity of such answers as a defense
to the liability on the policy and this is generally without regard to the subject matter of the
answers or the nature of the agent's duties or limitations on his authority, at least if not brought
to the attention of the applicant. It is equally well settled that if a correct representation is
made in a written application, or the insurance agent issuing the policy is appraised of the true
facts concerning the matter in question, as for instance the title to the insured premises, but
the agent inserts an incorrect statement in the policy, the insurer cannot rely upon the error
in avoidance of its liability". Home Ins. Co. vs. Mendenhall, 154 Ill., 452, 45 NE., 1078, 36
LRA., 374; Phoenix Ins. Co. vs. Tucker, 92 Ill., 64, 34 Am Rep., 106; Commercial Ins. Co. vs.
Spanknoble, 52 Ill., 53, 4 Am. Report, 582; Young vs. Hartford F. Ins. Co. 45 Iowa, 377, 24
Am. Rep., 754; Welsh vs. London Assur. 151 Pa., 607, 25 A, 142, 21 Am St. Rep., 726 —
(Taken from Am Juris. on Insurance Vol. 29, par. 843).
An insured may be justified in signing an application in blank at the request of the insurer's
agent, who agrees to fill it in from data furnished by the insured or from an old application. In
fact, an insurer cannot urge the falsity of representations contained in the policy issued, or in
the application, where such representations were inserted therein, either by the company or
 its agent, after the application was signed, without the knowledge or consent of the insured,
who has made no such representations. (Couch on Insurance, Vol. 4, par. 842 b.)
I believe that the motion for reconsideration presented in this case should be denied, not only because
of the weighty reasons relied upon in the decision which it attacks, but also because a dangerous
precedent would otherwise be established, for, with the destruction of the confidence which the public
has hitherto reposed in the duly accredited agents of insurance companies and in their examining
physicians, this branch of the economic life of the people will have to be unfavorably affected.
G.R. No. L-16163 February 28, 1963
IGNACIO SATURNINO, in his own behalf and as the JUDICIAL GUARDIAN OF CARLOS
SATURNINO, minor, plaintiffs-appellants,
vs.
THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, defendant-appellee.
Eleazaro A. Samson for plaintiffs-appellants.
Abello & Macias for defendant-appellee.
MAKALINTAL, J.:
Plaintiffs, now appellants, filed this action in the Court of First Instance of Manila to recover the sum of
P5,000.00, corresponding to the face value of an insurance policy issued by defendant on the life of
Estefania A. Saturnino, and the sum of P1,500.00 as attorney's fees. Defendant, now appellee, set up
special defenses in its answer, with a counterclaim for damages allegedly sustained as a result of the
unwarranted presentation of this case. Both the complaint and the counterclaim were dismissed by the
trial court; but appellants were declared entitled to the return of the premium already paid; plus interest
at 6% up to January 8, 1959, when a check for the corresponding amount — P359.65 — was sent to
them by appellee.
The policy sued upon is one for 20-year endowment non-medical insurance. This kind of policy dispenses
with the medical examination of the applicant usually required in ordinary life policies. However, detailed
information is called for in the application concerning the applicant's health and medical history. The
written application in this case was submitted by Saturnino to appellee on November 16, 1957,
witnessed by appellee's agent Edward A. Santos. The policy was issued on the same day, upon payment
of the first year's premium of P339.25. On September 19, 1958 Saturnino died of pneumonia, secondary
to influenza. Appellants here, who are her surviving husband and minor child, respectively, demanded
payment of the face value of the policy. The claim was rejected and this suit was subsequently instituted.
It appears that two months prior to the issuance of the policy or on September 9, 1957, Saturnino was
operated on for cancer, involving complete removal of the right breast, including the pectoral muscles
and the glands found in the right armpit. She stayed in the hospital for a period of eight days, after
which she was discharged, although according to the surgeon who operated on her she could not be
considered definitely cured, her ailment being of the malignant type.
Notwithstanding the fact of her operation Estefania A. Saturnino did not make a disclosure thereof in
her application for insurance. On the contrary, she stated therein that she did not have, nor had she
ever had, among other ailments listed in the application, cancer or other tumors; that she had not
consulted any physician, undergone any operation or suffered any injury within the preceding five years;
and that she had never been treated for nor did she ever have any illness or disease peculiar to her
sex, particularly of the breast, ovaries, uterus, and menstrual disorders. The application also recites
that the foregoing declarations constituted "a further basis for the issuance of the policy."
The question at issue is whether or not the insured made such false representations of material facts
as to avoid the policy. There can be no dispute that the information given by her in her application for
insurance was false, namely, that she had never had cancer or tumors, or consulted any physician or
undergone any operation within the preceding period of five years. Are the facts then falsely represented
material? The Insurance Law (Section 30) provides that "materiality is to be determined not by the
event, but solely by the probable and reasonable influence of the facts upon the party to whom the
communication is due, in forming his estimate of the proposed contract, or in making his inquiries." It
seems to be the contention of appellants that the facts subject of the representation were not material
in view of the "non-medical" nature of the insurance applied for, which does away with the usual
requirement of medical examination before the policy is issued. The contention is without merit. If
anything, the waiver of medical examination renders even more material the information required of
the applicant concerning previous condition of health and diseases suffered, for such information
necessarily constitutes an important factor which the insurer takes into consideration in deciding
whether to issue the policy or not. It is logical to assume that if appellee had been properly apprised of
the insured's medical history she would at least have been made to undergo medical examination in
order to determine her insurability.
Appellants argue that due information concerning the insured's previous illness and operation had been
given to appellees agent Edward A. Santos, who filled the application form after it was signed in blank
by Estefania A. Saturnino. This was denied by Santos in his testimony, and the trial court found such
testimony to be true. This is a finding of fact which is binding upon us, this appeal having been taken
upon questions of law alone. We do not deem it necessary, therefore, to consider appellee's additional
argument, which was upheld by the trial court, that in signing the application form in blank and leaving
it to Edward A. Santos to fill (assuming that to be the truth) the insured in effect made Santos her
agent for that purpose and consequently was responsible for the errors in the entries made by him in
that capacity.
In the application for insurance signed by the insured in this case, she agreed to submit to a medical
examination by a duly appointed examiner of appellee if in the latter's opinion such examination was
necessary as further evidence of insurability. In not asking her to submit to a medical examination,
appellants maintain, appellee was guilty of negligence, which precluded it from finding about her actual
state of health. No such negligence can be imputed to appellee. It was precisely because the insured
had given herself a clean bill of health that appellee no longer considered an actual medical checkup
necessary.
Appellants also contend there was no fraudulent concealment of the truth inasmuch as the insured
herself did not know, since her doctor never told her, that the disease for which she had been operated
on was cancer. In the first place the concealment of the fact of the operation itself was fraudulent, as
there could not have been any mistake about it, no matter what the ailment. Secondly, in order to avoid
a policy it is not necessary to show actual fraud on the part of the insured. In the case of Kasprzyk v.
Metropolitan Insurance Co., 140 N.Y.S. 211, 214, it was held:
Moreover, if it were the law that an insurance company could not depend a policy on the ground
of misrepresentation, unless it could show actual knowledge on the part of the applicant that
the statements were false, then it is plain that it would be impossible for it to protect itself and
its honest policyholders against fraudulent and improper claims. It would be wholly at the
mercy of any one who wished to apply for insurance, as it would be impossible to show actual
fraud except in the extremest cases. It could not rely on an application as containing
information on which it could act. There would be no incentive to an applicant to tell the truth.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to
prove their case not covered by this stipulation of facts. 1äwphï1.ñët
In this jurisdiction a concealment, whether intentional or unintentional, entitles the insurer to rescind
the contract of insurance, concealment being defined as "negligence to communicate that which a party
knows and ought to communicate" (Sections 24 & 26, Act No. 2427). In the case of Argente v. West
Coast Life Insurance Co., 51 Phil. 725, 732, this Court said, quoting from Joyce, The Law of Insurance,
2nd ed., Vol. 3:
"The basis of the rule vitiating the contract in cases of concealment is that it misleads or
deceives the insurer into accepting the risk, or accepting it at the rate of premium agreed
upon. The insurer, relying upon the belief that the assured will disclose every material fact
within his actual or presumed knowledge, is misled into a belief that the circumstance withheld
does not exist, and he is thereby induced to estimate the risk upon a false basis that it does
not exist."
The judgment appealed from, dismissing the complaint and awarding the return to appellants of the
premium already paid, with interest at 6% up to January 29, 1959, affirmed, with costs against
appellants.
G.R. No. L-34200 September 30, 1982
REGINA L. EDILLON, as assisted by her husband, MARCIAL EDILLON, petitioners-appellants,
vs.
MANILA BANKERS LIFE INSURANCE CORPORATION and the COURT OF FIRST INSTANCE OF
RIZAL, BRANCH V, QUEZON CITY, respondents-appellees.
K.V. Faylona for petitioners-appellants.
L. L. Reyes for respondents-appellees.
VASQUEZ, J.:
The question of law raised in this case that justified a direct appeal from a decision of the Court of First
Instance Rizal, Branch V, Quezon City, to be taken directly to the Supreme Court is whether or not the
acceptance by the private respondent insurance corporation of the premium and the issuance of the
corresponding certificate of insurance should be deemed a waiver of the exclusionary condition of
overage stated in the said certificate of insurance.
The material facts are not in dispute. Sometime in April 1969, Carmen O, Lapuz applied with respondent
insurance corporation for insurance coverage against accident and injuries. She filled up the blank
application form given to her and filed the same with the respondent insurance corporation. In the said
application form which was dated April 15, 1969, she gave the date of her birth as July 11, 1904. On
the same date, she paid the sum of P20.00 representing the premium for which she was issued the
corresponding receipt signed by an authorized agent of the respondent insurance corporation. (Rollo,
p. 27.) Upon the filing of said application and the payment of the premium on the policy applied for,
the respondent insurance corporation issued to Carmen O. Lapuz its Certificate of Insurance No.
128866. (Rollo, p. 28.) The policy was to be effective for a period of 90 days.
On May 31, 1969 or during the effectivity of Certificate of Insurance No. 12886, Carmen O. Lapuz died
in a vehicular accident in the North Diversion Road.
On June 7, 1969, petitioner Regina L. Edillon, a sister of the insured and who was the named beneficiary
in the policy, filed her claim for the proceeds of the insurance, submitting all the necessary papers and
other requisites with the private respondent. Her claim having been denied, Regina L. Edillon instituted
this action in the Court of First Instance of Rizal on August 27, 1969.
In resisting the claim of the petitioner, the respondent insurance corporation relies on a provision
contained in the Certificate of Insurance, excluding its liability to pay claims under the policy in behalf
of "persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years ..."
It is pointed out that the insured being over sixty (60) years of age when she applied for the insurance
coverage, the policy was null and void, and no risk on the part of the respondent insurance corporation
had arisen therefrom.
The trial court sustained the contention of the private respondent and dismissed the complaint; ordered
the petitioner to pay attorney's fees in the sum of ONE THOUSAND (P1,000.00) PESOS in favor of the
private respondent; and ordered the private respondent to return the sum of TWENTY (P20.00) PESOS
received by way of premium on the insurancy policy. It was reasoned out that a policy of insurance
being a contract of adhesion, it was the duty of the insured to know the terms of the contract he or she
is entering into; the insured in this case, upon learning from its terms that she could not have been
qualified under the conditions stated in said contract, what she should have done is simply to ask for a
refund of the premium that she paid. It was further argued by the trial court that the ruling calling for
a liberal interpretation of an insurance contract in favor of the insured and strictly against the insurer
may not be applied in the present case in view of the peculiar facts and circumstances obtaining therein.
We REVERSE the judgment of the trial court. The age of the insured Carmen 0. Lapuz was not concealed It is usually held that where the insurer, at the time of the issuance
to the insurance company. Her application for insurance coverage which was on a printed form furnished of a policy of insurance, has knowledge of existing facts which, if
by private respondent and which contained very few items of information clearly indicated her age of insisted on, would invalidate the contract from its very inception,
the time of filing the same to be almost 65 years of age. Despite such information which could hardly such knowledge constitutes a waiver of conditions in the contract
be overlooked in the application form, considering its prominence thereon and its materiality to the inconsistent with the known facts, and the insurer is stopped
coverage applied for, the respondent insurance corporation received her payment of premium and thereafter from asserting the breach of such conditions. The law is
issued the corresponding certificate of insurance without question. The accident which resulted in the charitable enough to assume, in the absence of any showing to the
death of the insured, a risk covered by the policy, occurred on May 31, 1969 or FORTY-FIVE (45) DAYS contrary, that an insurance company intends to execute a valid
after the insurance coverage was applied for. There was sufficient time for the private respondent to contract in return for the premium received; and when the policy
process the application and to notice that the applicant was over 60 years of age and thereby cancel contains a condition which renders it voidable at its inception, and
the policy on that ground if it was minded to do so. If the private respondent failed to act, it is either this result is known to the insurer, it will be presumed to have
because it was willing to waive such disqualification; or, through the negligence or incompetence of its intended to waive the conditions and to execute a binding contract,
employees for which it has only itself to blame, it simply overlooked such fact. Under the circumstances, rather than to have deceived the insured into thinking he is insured
the insurance corporation is already deemed in estoppel. It inaction to revoke the policy despite a when in fact he is not, and to have taken is money without
departure from the exclusionary condition contained in the said policy constituted a waiver of such consideration.' (29 Am. Jur., Insurance, section 807, at pp. 611-
condition, as was held in the case of "Que Chee Gan vs. Law Union Insurance Co., Ltd.,", 98 Phil. 85. 612.)
This case involved a claim on an insurance policy which contained a provision as to the installation of
fire hydrants the number of which depended on the height of the external wan perimeter of the bodega
The reason for the rule is not difficult to find.
that was insured. When it was determined that the bodega should have eleven (11) fire hydrants in the
compound as required by the terms of the policy, instead of only two (2) that it had, the claim under
the policy was resisted on that ground. In ruling that the said deviation from the terms of the policy did The plain, human justice of this doctrine is perfectly apparent. To
not prevent the claim under the same, this Court stated the following: allow a company to accept one's money for a policy of insurance
which it then knows to be void and of no effect, though it knows as
it must, that the assured believes it to be valid and binding, is so
We are in agreement with the trial Court that the appellant is barred by waiver (or
contrary to the dictates of honesty and fair dealing, and so closely
rather estoppel) to claim violation of the so-called fire hydrants warranty, for the
related to positive fraud, as to be abhorent to fairminded men. It
reason that knowing fully an that the number of hydrants demanded therein never
would be to allow the company to treat the policy as valid long
existed from the very beginning, the appellant nevertheless issued the policies in
enough to get the premium on it, and leave it at liberty to repudiate
question subject to such warranty, and received the corresponding premiums. It
it the next moment. This cannot be deemed to be the real intention
would be perilously close to conniving at fraud upon the insured to allow appellant to
of the parties. To hold that a literal construction of the policy
claim now as void ab initio the policies that it had issued to the plaintiff without
expressed the true intention of the company would be to indict it,
warning of their fatal defect, of which it was informed, and after it had misled the
for fraudulent purposes and designs which we cannot believe it to
defendant into believing that the policies were effective.
be guilty of (Wilson vs. Commercial Union Assurance Co., 96 Atl.
540, 543544).
The insurance company was aware, even before the policies were issued, that in the
premises insured there were only two fire hydrants installed by Que Chee Gan and
A similar view was upheld in the case of Capital Insurance & Surety Co., Inc. vs. Plastic Era Co., Inc.,
two others nearby, owned by the municipality of Tabaco, contrary to the requirements
65 SCRA 134, which involved a violation of the provision of the policy requiring the payment of
of the warranty in question. Such fact appears from positive testimony for the insured
premiums before the insurance shall become effective. The company issued the policy upon the
that appellant's agents inspected the premises; and the simple denials of appellant's
execution of a promissory note for the payment of the premium. A check given subsequent by the
representative (Jamiczon) can not overcome that proof. That such inspection was
insured as partial payment of the premium was dishonored for lack of funds. Despite such deviation
made it moreover rendered probable by its being a prerequisite for the fixing of the
from the terms of the policy, the insurer was held liable.
discount on the premium to which the insured was entitled, since the discount
depended on the number of hydrants, and the fire fighting equipment available
(See"'Scale of Allowances" to which the policies were expressly made subject). The Significantly, in the case before Us the Capital Insurance accepted the promise of
law, supported by a long line of cases, is expressed by American Jurisprudence (Vol. Plastic Era to pay the insurance premium within thirty (30) days from the effective
29, pp. 611-612) to be as follows: date of policy. By so doing, it has impliedly agreed to modify the tenor of the insurance
policy and in effect, waived the provision therein that it would only pay for the loss or
damage in case the same occurs after the payment of the premium. Considering that
 the insurance policy is silent as to the mode of payment, Capital Insurance is deemed
to have accepted the promissory note in payment of the premium. This rendered the
policy immediately operative on the date it was delivered. The view taken in most
cases in the United States:
... is that although one of conditions of an insurance policy is that
"it shall not be valid or binding until the first premium is paid", if it
is silent as to the mode of payment, promissory notes received by
the company must be deemed to have been accepted in payment
of the premium. In other words, a requirement for the payment of
the first or initial premium in advance or actual cash may be waived
by acceptance of a promissory note...
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE. In lieu thereof, the
private respondent insurance corporation is hereby ordered to pay to the petitioner the sum of TEN
THOUSAND (P10,000.00) PESOS as proceeds of Insurance Certificate No. 128866 with interest at the
legal rate from May 31, 1969 until fully paid, the further sum of TWO THOUSAND (P2,000.00) PESOS
as and for attorney's fees, and the costs of suit.
SO ORDERED.
G.R. No. 175666 July 29, 2013
MANILA BANKERS LIFE INSURANCE CORPORATION, Petitioner.
vs.
CRESENCIA P. ABAN, Respondent.
DECISION
DEL CASTILLO, J.:
The ultimate aim of Section 48 of the Insurance Code is to compel insurers to solicit business from or
provide insurance coverage only to legitimate and bona fide clients, by requiring them to thoroughly
investigate those they insure within two years from effectivity of the policy and while the insured is still
alive. If they do not, they will be obligated to honor claims on the policies they issue, regardless of
fraud, concealment or misrepresentation. The law assumes that they will do just that and not sit on
their laurels, indiscriminately soliciting and accepting insurance business from any Tom, Dick and Harry.
Assailed in this Petition for Review on Certiorari1 are the September 28, 2005 Decision2 of the Court of
Appeals' (CA) in CA-G.R. CV No. 62286 and its November 9, 2006 Resolution3 denying the petitioner’s
Motion for Reconsideration.4
Factual Antecedents
On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life
Insurance Corporation (Bankers Life), designating respondent Cresencia P. Aban (Aban), her niece,5 as
her beneficiary.
Petitioner issued Insurance Policy No. 747411 (the policy), with a face value of ₱100,000.00, in Sotero’s
favor on August 30, 1993, after the requisite medical examination and payment of the insurance
premium.6
On April 10, 1996,7 when the insurance policy had been in force for more than two years and seven
months, Sotero died. Respondent filed a claim for the insurance proceeds on July 9, 1996. Petitioner
conducted an investigation into the claim,8 and came out with the following findings:
1. Sotero did not personally apply for insurance coverage, as she was illiterate;
2. Sotero was sickly since 1990;
3. Sotero did not have the financial capability to pay the insurance premiums on Insurance
Policy No. 747411;
4. Sotero did not sign the July 3, 1993 application for insurance;9 and
5. Respondent was the one who filed the insurance application, and x x x designated herself
as the beneficiary.10
For the above reasons, petitioner denied respondent’s claim on April 16, 1997 and refunded the
premiums paid on the policy.11
On April 24, 1997, petitioner filed a civil case for rescission and/or annulment of the policy, which was
docketed as Civil Case No. 97-867 and assigned to Branch 134 of the Makati Regional Trial Court. The
main thesis of the Complaint was that the policy was obtained by fraud, concealment and/or
misrepresentation under the Insurance Code,12 which thus renders it voidable under Article 139013 of
the Civil Code.
Respondent filed a Motion to Dismiss14 claiming that petitioner’s cause of action was barred by
prescription pursuant to Section 48 of the Insurance Code, which provides as follows:
Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this
chapter, such right must be exercised previous to the commencement of an action on the contract.
After a policy of life insurance made payable on the death of the insured shall have been in force during
the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement,
the insurer cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent
concealment or misrepresentation of the insured or his agent.
During the proceedings on the Motion to Dismiss, petitioner’s investigator testified in court, stating
among others that the insurance underwriter who solicited the insurance is a cousin of respondent’s
husband, Dindo Aban,15 and that it was the respondent who paid the annual premiums on the policy.16
Ruling of the Regional Trial Court
concealment or misrepresentation after the lapse of more than two years from its issuance. It
ratiocinated that petitioner was equipped with ample means to determine, within the first two years of
the policy, whether fraud, concealment or misrepresentation was present when the insurance coverage
was obtained. If it failed to do so within the statutory two-year period, then the insured must be
protected and allowed to claim upon the policy.
Petitioner moved for reconsideration,21 but the CA denied the same in its November 9, 2006
Resolution.22 Hence, the present Petition.

Issues
On December 9, 1997, the trial court issued an Order17 granting respondent’s Motion to Dismiss, thus:

Petitioner raises the following issues for resolution:

WHEREFORE, defendant CRESENCIA P. ABAN’s Motion to Dismiss is hereby granted. Civil Case No. 97-
867 is hereby dismissed.
I
SO ORDERED. 18

WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE ORDER OF THE TRIAL COURT
DISMISSING THE COMPLAINT ON THE GROUND OF PRESCRIPTION IN CONTRAVENTION (OF)
In dismissing the case, the trial court found that Sotero, and not respondent, was the one who procured
PERTINENT LAWS AND APPLICABLE JURISPRUDENCE.
the insurance; thus, Sotero could legally take out insurance on her own life and validly designate – as
she did – respondent as the beneficiary. It held further that under Section 48, petitioner had only two
years from the effectivity of the policy to question the same; since the policy had been in force for more II
than two years, petitioner is now barred from contesting the same or seeking a rescission or annulment
thereof.
WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE APPLICATION OF THE
INCONTESTABILITY PROVISION IN THE INSURANCE CODE BY THE TRIAL COURT.
Petitioner moved for reconsideration, but in another Order19 dated October 20, 1998, the trial court
stood its ground.
III

Petitioner interposed an appeal with the CA, docketed as CA-G.R. CV No. 62286. Petitioner questioned
WHETHER THE COURT OF APPEALS ERRED IN DENYING PETITIONER’S MOTION FOR
the dismissal of Civil Case No. 97-867, arguing that the trial court erred in applying Section 48 and
RECONSIDERATION.23
declaring that prescription has set in. It contended that since it was respondent – and not Sotero – who
obtained the insurance, the policy issued was rendered void ab initio for want of insurable interest.
Petitioner’s Arguments
Ruling of the Court of Appeals
In praying that the CA Decision be reversed and that the case be remanded to the trial court for the
conduct of further proceedings, petitioner argues in its Petition and Reply24 that Section 48 cannot apply
On September 28, 2005, the CA issued the assailed Decision, which contained the following decretal
to a case where the beneficiary under the insurance contract posed as the insured and obtained the
portion:
policy under fraudulent circumstances. It adds that respondent, who was merely Sotero’s niece, had no
insurable interest in the life of her aunt.
WHEREFORE, in the light of all the foregoing, the instant appeal is DISMISSED for lack of merit.
Relying on the results of the investigation that it conducted after the claim for the insurance proceeds
SO ORDERED.20 was filed, petitioner insists that respondent’s claim was spurious, as it appeared that Sotero did not
actually apply for insurance coverage, was unlettered, sickly, and had no visible source of income to
pay for the insurance premiums; and that respondent was an impostor, posing as Sotero and
The CA thus sustained the trial court. Applying Section 48 to petitioner’s case, the CA held that petitioner
fraudulently obtaining insurance in the latter’s name without her knowledge and consent.
may no longer prove that the subject policy was void ab initio or rescindible by reason of fraudulent
Petitioner adds that Insurance Policy No. 747411 was void ab initio and could not have given rise to
rights and obligations; as such, the action for the declaration of its nullity or inexistence does not
prescribe.25
Respondent’s Arguments
Respondent, on the other hand, essentially argues in her Comment26 that the CA is correct in applying
Section 48. She adds that petitioner’s new allegation in its Petition that the policy is void ab initio merits
no attention, having failed to raise the same below, as it had claimed originally that the policy was
merely voidable.
On the issue of insurable interest, respondent echoes the CA’s pronouncement that since it was Sotero
who obtained the insurance, insurable interest was present. Under Section 10 of the Insurance Code,
Sotero had insurable interest in her own life, and could validly designate anyone as her beneficiary.
Respondent submits that the CA’s findings of fact leading to such conclusion should be respected.
Our Ruling
The Court denies the Petition.
The Court will not depart from the trial and appellate courts’ finding that it was Sotero who obtained
the insurance for herself, designating respondent as her beneficiary. Both courts are in accord in this
respect, and the Court is loath to disturb this. While petitioner insists that its independent investigation
on the claim reveals that it was respondent, posing as Sotero, who obtained the insurance, this claim
is no longer feasible in the wake of the courts’ finding that it was Sotero who obtained the insurance
for herself. This finding of fact binds the Court.
With the above crucial finding of fact – that it was Sotero who obtained the insurance for herself –
petitioner’s case is severely weakened, if not totally disproved. Allegations of fraud, which are
predicated on respondent’s alleged posing as Sotero and forgery of her signature in the insurance
application, are at once belied by the trial and appellate courts’ finding that Sotero herself took out the
insurance for herself. "Fraudulent intent on the part of the insured must be established to entitle the
insurer to rescind the contract."27 In the absence of proof of such fraudulent intent, no right to rescind
arises.
Moreover, the results and conclusions arrived at during the investigation conducted unilaterally by
petitioner after the claim was filed may simply be dismissed as self-serving and may not form the basis
of a cause of action given the existence and application of Section 48, as will be discussed at length
below.
Section 48 serves a noble purpose, as it regulates the actions of both the insurer and the insured. Under
the provision, an insurer is given two years – from the effectivity of a life insurance contract and while
the insured is alive – to discover or prove that the policy is void ab initio or is rescindible by reason of
the fraudulent concealment or misrepresentation of the insured or his agent. After the two-year period
lapses, or when the insured dies within the period, the insurer must make good on the policy, even
though the policy was obtained by fraud, concealment, or misrepresentation. This is not to say that
insurance fraud must be rewarded, but that insurers who recklessly and indiscriminately solicit and
obtain business must be penalized, for such recklessness and lack of discrimination ultimately work to
the detriment of bona fide takers of insurance and the public in general.
Section 48 regulates both the actions of the insurers and prospective takers of life insurance. It gives
insurers enough time to inquire whether the policy was obtained by fraud, concealment, or
misrepresentation; on the other hand, it forewarns scheming individuals that their attempts at insurance
fraud would be timely uncovered – thus deterring them from venturing into such nefarious enterprise.
At the same time, legitimate policy holders are absolutely protected from unwarranted denial of their
claims or delay in the collection of insurance proceeds occasioned by allegations of fraud, concealment,
or misrepresentation by insurers, claims which may no longer be set up after the two-year period
expires as ordained under the law.
Thus, the self-regulating feature of Section 48 lies in the fact that both the insurer and the insured are
given the assurance that any dishonest scheme to obtain life insurance would be exposed, and attempts
at unduly denying a claim would be struck down. Life insurance policies that pass the statutory two-
year period are essentially treated as legitimate and beyond question, and the individuals who wield
them are made secure by the thought that they will be paid promptly upon claim. In this manner,
Section 48 contributes to the stability of the insurance industry.
Section 48 prevents a situation where the insurer knowingly continues to accept annual premium
payments on life insurance, only to later on deny a claim on the policy on specious claims of fraudulent
concealment and misrepresentation, such as what obtains in the instant case. Thus, instead of
conducting at the first instance an investigation into the circumstances surrounding the issuance of
Insurance Policy No. 747411 which would have timely exposed the supposed flaws and irregularities
attending it as it now professes, petitioner appears to have turned a blind eye and opted instead to
continue collecting the premiums on the policy. For nearly three years, petitioner collected the
premiums and devoted the same to its own profit. It cannot now deny the claim when it is called to
account. Section 48 must be applied to it with full force and effect.
The Court therefore agrees fully with the appellate court’s pronouncement that –
the "incontestability clause" is a provision in law that after a policy of life insurance made payable on
the death of the insured shall have been in force during the lifetime of the insured for a period of two
(2) years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy
is void ab initio or is rescindible by reason of fraudulent concealment or misrepresentation of the insured
or his agent.
The purpose of the law is to give protection to the insured or his beneficiary by limiting the rescinding
of the contract of insurance on the ground of fraudulent concealment or misrepresentation to a period
of only two (2) years from the issuance of the policy or its last reinstatement.
The insurer is deemed to have the necessary facilities to discover such fraudulent concealment or
misrepresentation within a period of two (2) years. It is not fair for the insurer to collect the premiums
as long as the insured is still alive, only to raise the issue of fraudulent concealment or misrepresentation
when the insured dies in order to defeat the right of the beneficiary to recover under the policy.
At least two (2) years from the issuance of the policy or its last reinstatement, the beneficiary is given
the stability to recover under the policy when the insured dies. The provision also makes clear when
the two-year period should commence in case the policy should lapse and is reinstated, that is, from
the date of the last reinstatement.
After two years, the defenses of concealment or misrepresentation, no matter how patent or well-
founded, will no longer lie.
Congress felt this was a sufficient answer to the various tactics employed by insurance companies to
avoid liability.
The so-called "incontestability clause" precludes the insurer from raising the defenses of false
representations or concealment of material facts insofar as health and previous diseases are concerned
if the insurance has been in force for at least two years during the insured’s lifetime. The phrase "during
the lifetime" found in Section 48 simply means that the policy is no longer considered in force after the
insured has died. The key phrase in the second paragraph of Section 48 is "for a period of two years."
As borne by the records, the policy was issued on August 30, 1993, the insured died on April 10, 1996,
and the claim was denied on April 16, 1997. The insurance policy was thus in force for a period of 3
years, 7 months, and 24 days. Considering that the insured died after the two-year period, the plaintiff-
appellant is, therefore, barred from proving that the policy is void ab initio by reason of the insured’s
fraudulent concealment or misrepresentation or want of insurable interest on the part of the beneficiary,
herein defendant-appellee.
Well-settled is the rule that it is the plaintiff-appellant’s burden to show that the factual findings of the
trial court are not based on substantial evidence or that its conclusions are contrary to applicable law
and jurisprudence. The plaintiff-appellant failed to discharge that burden.28
Petitioner claims that its insurance agent, who solicited the Sotero account, happens to be the cousin
of respondent’s husband, and thus insinuates that both connived to commit insurance fraud. If this
were truly the case, then petitioner would have discovered the scheme earlier if it had in earnest
conducted an investigation into the circumstances surrounding the Sotero policy. But because it did not
and it investigated the Sotero account only after a claim was filed thereon more than two years later,
naturally it was unable to detect the scheme. For its negligence and inaction, the Court cannot
sympathize with its plight. Instead, its case precisely provides the strong argument for requiring
insurers to diligently conduct investigations on each policy they issue within the two-year period
mandated under Section 48, and not after claims for insurance proceeds are filed with them.
Besides, if insurers cannot vouch for the integrity and honesty of their insurance agents/salesmen and
the insurance policies they issue, then they should cease doing business. If they could not properly
screen their agents or salesmen before taking them in to market their products, or if they do not
thoroughly investigate the insurance contracts they enter into with their clients, then they have only
themselves to blame. Otherwise said, insurers cannot be allowed to collect premiums on insurance
policies, use these amounts collected and invest the same through the years, generating profits and
returns therefrom for their own benefit, and thereafter conveniently deny insurance claims by
questioning the authority or integrity of their own agents or the insurance policies they issued to their
premium-paying clients. This is exactly one of the schemes which Section 48 aims to prevent.
Insurers may not be allowed to delay the payment of claims by filing frivolous cases in court, hoping
that the inevitable may be put off for years – or even decades – by the pendency of these unnecessary
court cases. In the meantime, they benefit from collecting the interest and/or returns on both the
premiums previously paid by the insured and the insurance proceeds which should otherwise go to their
beneficiaries. The business of insurance is a highly regulated commercial activity in the country,29 and
is imbued with public interest.30 "An insurance contract is a contract of adhesion which must be
construed liberally in favor of the insured and strictly against the insurer in order to safeguard the
former’s interest."31
WHEREFORE, the Petition is DENIED. The assailed September 28, 2005 Decision and the November 9,
2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62286 are AFFIRMED.
SO ORDERED.
G.R. No. 211212, June 08, 2016
SUN LIFE OF CANADA (PHILIPPINES), INC., Petitioner, v. MA. DAISY'S. SIBYA, JESUS MANUEL
S. SIBYA III, JAIME LUIS S. SIBYA, AND THE ESTATE OF THE DECEASED ATTY. JESUS SIBYA,
JR., Respondents.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision2 dated November 18, 2013 and Resolution3 dated February 13, 2014
of the Court of Appeals (CA) in CA-G.R. CV. No. 93269. In both instances, the CA affirmed the
Decision4 dated March 16, 2009 of the Regional Trial Court (RTC) of Makati City, Branch 136, in Civil
Case No. 01-1506, ordering petitioner Sun Life of Canada (Philippines), Inc. (Sun Life) to pay Ma. Daisy
S. Sibya (Ma. Daisy), Jesus Manuel S. Sibya III, and Jaime Luis S. Sibya (respondents) the amounts of
P1,000,000.00 as death benefits, P100,000.00 as moral damages, P100,000.00 as exemplary damages,
and P100,000.00 as attorney's fees and costs of suit. Insofar as the charges for violation of Sections
241 and 242 of Presidential Decree No. 612, or the Insurance Code of the Philippines, however, the CA
modified the decision of the RTC and absolved Sun Life therein.
Statement of Facts of the Case authorization to investigate executed by Atty. Jesus Jr. to Sun Life, the latter had all the means of
ascertaining the facts allegedly concealed by the applicant.16
On January 10, 2001, Atty. Jesus Sibya, Jr. (Atty. Jesus Jr.) applied for life insurance with Sun Life. In
his Application for Insurance, he indicated that he had sought advice for kidney problems.5 Atty. Jesus Aggrieved, Sun Life elevated the case to the CA.
Jr. indicated the following in his application:
Ruling of the CA
"Last 1987, had undergone lithotripsy due to kidney stone under Dr. Jesus Benjamin Mendoza at
National Kidney Institute, discharged after 3 days, no recurrence as claimed." On appeal, the CA issued its Decision17 dated November 18, 2013 affirming the RTC decision in ordering
On February 5, 2001, Sun Life approved Atty. Jesus Jr.'s application and issued Insurance Policy No. Sun Life to pay death benefits and damages in favor of the respondents. The CA, however, modified
031097335. The policy indicated the respondents as beneficiaries and entitles them to a death benefit the RTC decision by absolving Sun Life from the charges of violation of Sections 241 and 242 of the
of P1,000,000.00 should Atty. Jesus Jr. dies on or before February 5, 2021, or a sum of money if Atty. Insurance Code.18
Jesus Jr. is still living on the endowment date.7
The CA ruled that the evidence on records show that there was no fraudulent intent on the part of Atty.
On May 11, 2001, Atty. Jesus Jr. died as a result of a gunshot wound in San Joaquin, Iloilo. As such, Jesus Jr. in submitting his insurance application. Instead, it found that Atty. Jesus Jr. admitted in his
Ma. Daisy filed a Claimant's Statement with Sun Life to seek the death benefits indicated in his insurance application that he had sought medical treatment for kidney ailment.19
policy.8
Sun Life filed a Motion for Partial Reconsideration20 dated December 11, 2013 but the same was denied
In a letter dated August 27, 2001, however, Sun Life denied the claim on the ground that the details in a Resolution21 dated February 13, 2014.
on Atty. Jesus Jr.'s medical history were not disclosed in his application. Simultaneously, Sun Life
tendered a check representing the refund of the premiums paid by Atty. Jesus Jr.9 Undaunted, Sun Life filed an appeal by way of petition for review on certiorari under Rule 45 of the
Rules of Court before this Court.
The respondents reiterated their claim against Sun Life thru a letter dated September 17, 2001. Sun
Life, however, refused to heed the respondents' requests and instead filed a Complaint for Rescission The Issue
before the RTC and prayed for judicial confirmation of Atty. Jesus Jr.'s rescission of insurance policy.10
Essentially, the main issue of the instant case is whether or not the CA erred when it affirmed the RTC
In its Complaint, Sun Life alleged that Atty. Jesus Jr. did not disclose in his insurance application his decision finding that there was no concealment or misrepresentation when Atty. Jesus Jr. submitted his
previous medical treatment at the National Kidney Transplant Institute in May and August of 1994. insurance application with Sun Life.
According to Sun Life, the undisclosed fact suggested that the insured was in "renal failure" and at a
high risk medical condition. Consequently, had it known such fact, it would not have issued the Ruling of the Court
insurance policy in favor of Atty. Jesus Jr.11
The petition has no merit.
For their defense, the respondents claimed that Atty. Jesus Jr. did not commit misrepresentation in his
application for insurance. They averred that Atty. Jesus Jr. was in good faith when he signed the In Manila Bankers Life Insurance Corporation v. Aban,22 the Court held that if the insured dies within
insurance application and even authorized Sun Life to inquire further into his medical history for the two-year contestability period, the insurer is bound to make good its obligation under the policy,
verification purposes. According to them, the complaint is just a ploy to avoid the payment of insurance regardless of the presence or lack of concealment or misrepresentation. The Court held:
claims.12
Section 48 serves a noble purpose, as it regulates the actions of both the insurer and the insured. Under
Ruling of the RTC the provision, an insurer is given two years - from the effectivity of a life insurance contract and while
the insured is alive - to discover or prove that the policy is void ab initio or is rescindible by reason of
On March 16, 2009, the RTC issued its Decision13 dismissing the complaint for lack of merit. The RTC the fraudulent concealment or misrepresentation of the insured or his agent. After the two-year
held that Sun Life violated Sections 241, paragraph 1(b), (d), and (e)14 and 24215 of the Insurance Code period lapses, or when the insured dies within the period, the insurer must make good on
when it refused to pay the rightful claim of the respondents. Moreover, the RTC ordered Sun Life to pay the policy, even though the policy was obtained by fraud, concealment, or
the amounts of P1,000,000.00 as death benefits, P100,000.00 as moral damages, P100,000.00 as misrepresentation. This is not to say that insurance fraud must be rewarded, but that insurers who
exemplary damages, and P100,000.00 as attorney's fees and costs of suit. recklessly and indiscriminately solicit and obtain business must be penalized, for such recklessness and
lack of discrimination ultimately work to the detriment of bona fide takers of insurance and the public
The RTC held that Atty. Jesus Jr. did not commit material concealment and misrepresentation when he in general.23 (Emphasis ours)
applied for life insurance with Sun Life. It observed that given the disclosures and the waiver and
In the present case, Sun Life issued Atty. Jesus Jr.'s policy on February 5, 2001. Thus, it has two years
from its issuance, to investigate and verify whether the policy was obtained by fraud, concealment, or SO ORDERED
misrepresentation. Upon the death of Atty. Jesus Jr., however, on May 11, 2001, or a mere three
months from the issuance of the policy, Sun Life loses its right to rescind the policy. As discussed
in Manila Bankers, the death of the insured within the two-year period will render the right of the insurer
to rescind the policy nugatory. As such, the incontestability period will now set in.

Assuming, however, for the sake of argument, that the incontestability period has not yet set in, the
Court agrees, nonetheless, with the CA when it held that Sun Life failed to show that Atty. Jesus Jr.
committed concealment and misrepresentation.

As correctly observed by the CA, Atty. Jesus Jr. admitted in his application his medical treatment for
kidney ailment. Moreover, he executed an authorization in favor of Sun Life to conduct investigation in
reference with his medical history. The decision in part states:

Records show that in the Application for Insurance, [Atty. Jesus Jr.] admitted that he had sought medical
treatment for kidney ailment. When asked to provide details on the said medication, [Atty. Jesus Jr.]
indicated the following information: year ("1987"), medical procedure ("undergone lithotripsy due to
kidney stone"), length of confinement ("3 days"), attending physician ("Dr. Jesus Benjamin Mendoza")
and the hospital ("National Kidney Institute").

It appears that [Atty. Jesus Jr.] also signed the Authorization which gave [Sun Life] the opportunity to
obtain information on the facts disclosed by [Atty. Jesus Jr.] in his insurance application. x x x

x x x x

Given the express language of the Authorization, it cannot be said that [Atty. Jesus Jr.] concealed his
medical history since [Sun Life] had the means of ascertaining [Atty. Jesus Jr.'s] medical record.

With regard to allegations of misrepresentation, we note that [Atty. Jesus Jr.] was not a medical doctor,
and his answer "no recurrence" may be construed as an honest opinion. Where matters of opinion or
judgment are called for, answers made in good faith and without intent to deceive will not avoid a policy
even though they are untrue.24 (Citations omitted and italics in the original)
Indeed, the intent to defraud on the part of the insured must be ascertained to merit rescission of the
insurance contract. Concealment as a defense for the insurer to avoid liability is an affirmative defense
and the duty to establish such defense by satisfactory and convincing evidence rests upon the provider
or insurer.25 In the present case, Sun Life failed to clearly and satisfactorily establish its allegations,
and is therefore liable to pay the proceeds of the insurance.

Moreover, well-settled is the rule that this Court is not a trier of facts. Factual findings of the lower
courts are entitled to great weight and respect on appeal, and in fact accorded finality when supported
by substantial evidence on the record.26

WHEREFORE, the petition for review is DENIED. The Decision dated November 18, 2013 and
Resolution dated February 13, 2014 of the Court of Appeals in CA-G.R. CV. No. 93269 are
hereby AFFIRMED.