Great Pacific Life Assurance Corp.

vs CA, Leuterio

Facts: Petitioner Grepalife and DBP executed a contract of group insurance, with
petitioner agreeing to insure the lives of eligible housing loan mortgagors of DBP.
Private respondent Dr. Leuterio, a housing debtor of DBP, applied for membership
in the group life insurance plan. In his application, Leuterio declared that he was
in good health and have not consulted any physician for a heart condition nor
high blood pressure among others. Thereafter, Grepalife approved the application
and issued an insurance coverage in favor of Leuterio.

Less than a year after, Leuterio died due to massive cerebral hemorrhage.
DBP accordingly submitted a claim to Greapalife which the latter denied, arguing
that Leuterio did not disclose that he had been suffering from hypertension which
according to them constituted concealment that justifies denial of the claim.

Leuterio’s widow, Medarda, filed a complaint with the RTC against

Grepalife for specific performance with damages. During the trial, the doctor who
issued the death certificate of Leuterio testified that based partly from
information given by decedent’s widow, Leuterio complained of headaches
presumably due to high blood pressure. Other causes were not ruled out because
the testimony was inconclusive and no autopsies were performed.

The RTC ruled for respondent widow that was sustained by the CA on
appeal. Hence, the present recourse.

Issue: whether or not Leuterio was guilty of concealing that he suffers from high
blood pressure which would justify the denial of the claim.

Held: No. Concealment exists where the assured had knowledge of a fact
material to the risk, and honesty, good faith, and fair dealing requires that he
should communicate it to the insurer, but he designedly and intentional withholds
the same. However, 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.

In the case at bar, Grepalife merely relied on the testimony of the attending
physician as supported by the information given by the widow that her husband
was probably suffering from hypertension. On the contrary such findings are not
conclusive for the lack of autopsy nor knowledge of decedent’s previous hospital
confinement. The death certificate even stated that hypertension was only the
possible cause of death. Hence, for failure to clearly and satisfactorily establish
that there was concealment on the part of the insured, petitioner is therefore
liable to pay the proceeds off the insurance.