J. Quisimbing
Facts:
A contract of group life insurance was executed between petitioner Great Pacific and Development Bank Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP.
Wilfredo Leuterio, a physician and a housing debtor of DBP, applied for membership in the group life insurance plan. In an application form, Dr. Leuterio answered questions concerning his health condition as follows:
“7. Have you ever had, or consulted, a physician for a heart condition, high blood pressure, cancer, diabetes, lung, kidney or stomach disorder or any other physical impairment?
8. Are you now, to the best of your knowledge, in good health?”
Grepalife issued a coverage to the value of P86,200.00 pesos.
Dr. Leuterio died due to “massive cerebral hemorrhage.” DBP submitted a death claim to Grepalife. Grepalife denied the claim alleging that Dr. Leuterio was not physically healthy when he applied for an insurance coverage. Grepalife insisted that Dr. Leuterio did not disclose he had been suffering from hypertension, which caused his death. Allegedly, such non-disclosure constituted concealment that justified the denial of the claim.
The widow, respondent Medarda V. Leuterio, filed against Grepalife.
The trial court rendered a decision in favor of respondent widow and against Grepalife. The Court of Appeals sustained the trial court’s decision.
Issues:
1. Whether the Court of Appeals erred in holding petitioner liable to DBP as beneficiary in a group life insurance contract from a complaint filed by the widow of the decedent/mortgagor?
2. Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed that he had hypertension, which would vitiate the insurance contract?
3. Whether the Court of Appeals erred in holding Grepalife liable in the amount of eighty six thousand, two hundred (P86,200.00) pesos without proof of the actual outstanding mortgage payable by the mortgagor to DBP.
Held: No to all three. Petition dismissed.
Ratio:
1. Petitioner alleges that the complaint was instituted by the widow of Dr. Leuterio, not the real party in interest, hence the trial court acquired no jurisdiction over the case. It argues that when the Court of Appeals affirmed the trial court’s judgment, Grepalife was held liable to pay the proceeds of insurance contract in favor of DBP, the indispensable party who was not joined in the suit.
The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance, the policy stating that: “In the event of the debtor’s death before his indebtedness with the Creditor [DBP] shall have been fully paid, an amount to pay the outstanding indebtedness shall first be paid to the creditor and the balance of sum assured, if there is any, shall then be paid to the beneficiary/ies designated by the debtor.” When DBP’s claim was denied, it collected the debt from the mortgagor and took the necessary action of foreclosure on the residential lot of private respondent.
Gonzales vs. Yek Tong Lin- Insured, being the person with whom the contract was made, is primarily the proper person to bring suit thereon. Insured may thus sue, although the policy is taken wholly or in part for the benefit of another person named or unnamed, and although it is expressly made payable to another as his interest may appear or otherwise. 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 mortgagee’s interest is less than the full amount recoverable under the policy. Insured may be regarded as the real party in interest, although he has assigned the policy for the purpose of collection, or has assigned as collateral security any judgment he may obtain.
And since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest or not, and such person may recover it whatever the insured might have recovered,[14] the widow of the decedent Dr. Leuterio may file the suit against the insurer, Grepalife.
2. The medical findings were not conclusive because Dr. Mejia did not conduct an autopsy on the body of the decedent. The medical certificate stated that hypertension was “the possible cause of death.” Hence, the statement of the physician was properly considered by the trial court as hearsay.
Contrary to appellant’s allegations, there was no sufficient proof that the insured had suffered from hypertension. Aside from the statement of the insured’s widow who was not even sure if the medicines taken by Dr. Leuterio were for hypertension, the appellant had not proven nor produced any witness who could attest to Dr. Leuterio’s medical history.
Appellant insurance company had failed to establish that there was concealment made by the insured, hence, it cannot refuse payment of the claim.”
The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer.
3. A life insurance policy is a valued policy. Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policy. The mortgagor paid the premium according to the coverage of his insurance.
In the event of the debtor’s death before his indebtedness with the creditor shall have been fully paid, an amount to pay the outstanding indebtedness shall first be paid to the creditor.
DBP foreclosed one of the deceased person’s lots to satisfy the mortgage. Hence, the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries.
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