CONCEALMENT

Great Pacific Life vs. CA and Medarda Leuterio

Facts:
• Group life insurance was executed by Petitioner with DBP
o Petitioner agreed to insure the lives of eligible housing loan mortgagors of
DBP.
• Dr. Wilfredo Leuterio applied for membership in the group life
o In the application form, he stated that he did not have any physical
impairment and is in good health to the best of his knowledge.
• Petitioner issued to Dr. Leuterio a certificate for 86,200 as insurance coverage to
the extent of his DBP mortgage.
• Dr. Leuterio died due to a massive cerebral hemorrhage.
o DBP submitted a death claim to petitioner but it was denied by the latter.
o Petitioner claims that the deceased was not physically healthy when he
applied for an insurance coverage.
o Petitioner insists that the deceased did not disclose that he had been
suffering from hypertension.
▪ That such non-disclosure constituted concealment and justified the
denial of the claim.
• Respondent filed a complaint for specific performance and damages.
• Dr. Mejia, the one who issued the death certificate, was called in to testify.
o The findings stated that the deceased complained of headaches
presumably due to high blood pressure.

Issue:
Whether or not there was concealment on the part of the deceased that justified the
denial of the insurance claim

Held:
No. petitioner merely relied on the testimony of the attending physician as supported by
the information given by the widow of the decedent. The medical findings were not
conclusive because an autopsy was not conducted on the body of the deceased. The
statement of the widow was due to her unreliable recollection of events. The statement
of the physician is properly considered as hearsay.

Petitioner 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. Petitioner failed to clearly and satisfactorily
establish its defense, and is therefore liable to pay the proceeds of the insurance.
Ma. Lourdes Florendo vs. Philam Plans
Facts:
• Manuel Florendo filed an application for comprehensive pension plan with the
respondent Philam Plans.
o The deceased signed the application and left the filling up to Perla
Abcede.
• The comprehensive pension plan also provided life insurance coverage to
Florendo.
o Under the group master policy, life insurance coverage including
accidental death will be automatically provided to all who sign up for the
comprehensive pension plan.
• 11 months later, manuel died due to blood poisoning.
o The claim was denied due to the defense that the deceased was on
maintenance medicine for his heart and had an implanted pacemaker.
o That he suffered from diabetes and was taking insulin.
• RTC held that the deceased was not guilty of concealing his state of health from
the pension plan application.
o CA reversed the decision of the RTC holding that insurance policies are
traditionally contracts of uberrimae fidae or contracts of utmost good faith.
Issue:
Whether or not there was concealment on the part of the deceased when he kept blank
the questions in his pension plan application regarding the ailments he suffered from.

Held:
Yes. Respondent waived the medical examination for the deceased. Therefore, it had to
rely largely on his stating the truth regarding his health in his application. For after all, he
knew more than anyone that he had been under treatment for heart condition and
diabetes for more than five years preceding his submission of that application. But he
kept those crucial facts from philam plans.
Signing the application without filling in the details regarding his continuing treatments
for heart condition and diabetes, the assumption is that he has never been treated for
the said illness in the last five years preceding his application.

Even if the soliciting agent knew that manuel had a pacemaker implanted, the
responsibility for preparing the application belonged to manuel. Nothing in it implies that
someone else may provide the information that philam needed.

Manuel had been taking medicine for his heart condition and diabetes when he
submitted his pension plan application. These clearly fell within the five-year period.
Sun Life of Canada vs. Ma. Daisy’s Sibya
Facts:
• Atty. Jesus Sibya applied for life insurance with petitioner.
o In the application, he indicated that he sought advice for kidney problems
o The application was approved.
o He died due to a gunshot wound
• Respondent filed a claim for death benefits
o Petitioner denied the claim due to non-disclosure of the medical history in
the application.
o Petitioner tendered a check representing the refund of the premiums paid.
• Petitioner filed a complaint for rescission of the insurance policy.
o That the undisclosed fact suggested that the insured was in renal failure
and at a high-risk medical condition.
o That had the petitioner known of the medical condition, it would have not
issued the policy.
• Respondent claimed that the deceased was in good faith.
o That he signed the insurance application and authorized the petitioner to
inquire further into his medical history for verification purposes.
• RTC held that the deceased did not commit material concealment and
misrepresentation when he applied for life insurance with Sun Life.
o That the waiver and authorization executed by the deceased negates that
fact and petitioner had all the means to ascertain the alleged concealment.
• CA upheld the decision of the RTC.
o There was no fraudulent intent on the part of the deceased in submitting
his insurance application.

Issue:
Whether or not there was no concealment or misrepresentation when the deceased
submitted his insurance application with the petitioner.
Held:
No. 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.

After the death of the deceased, 3 months after the issuance of the policy, Sun Life
loses its right to rescind the policy. 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 the deceased committed concealment and misrepresentation.

The deceased 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 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. 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.
 DOUBLE INSURANCE
Malayan Insurance Co. Inc. vs. Philippines First Insurance and Reputable
Forwarded Services Inc.
Facts:
• Wyeth and Respondent Reputable Forwarded Services annually executed a
contract of carriage whereby the latter undertook to transport and deliver the
former’s products to its customers, dealers or salesmen.
• Wyeth obtained a marine policy from the respondent Philippines first insurance
co.
• The contract of carriage between wyeth and reputable required that the latter to
secure an insurance policy on the formers goods.
o Reputable signed a Special Risk Insurance Policy with Malayan.
• The truck carrying the products of wyeth was hijacked by about 10 armed men.
The truck was recovered two weeks later but it was already empty.
• Philippine first paid the indemnity to wyeth and demanded reimbursement from
reputable. The latter impleaded Malayan in order to obtain the Special Risk
Insurance Policy.
• RTC held that reputable was liable to Philippine first. In turn, Malayan was liable
to reputable to the extend of the policy coverage.
• Malayan presents as a defense the other insurance clause which covers the
subsisting insurance.

Issue:
Whether or not there was double insurance in accordance with Section 5 and 12 of the
insurance contract between Malayan and Reputable.

Held:
No. The requisites of double insurance are as follows:
a. The person insured is the same;
b. Two or more insurers insuring separately;
c. Identity in the subject matter;
 d. Identity of interest insured; and
e. Identity of the risk or peril insured against.

Even though the two concerned insurance policies were issued over the same goods
and cover the same risk, there arises no double insurance since they were issued to
two different persons/entities having distinct insurable interest. Necessarily, over
insurance by double insurance cannot likewise exist.
 PREMIUM
Arce vs. Capital Insurance and Surety Co. Inc.
Facts:
• Petitioner insured his house in tondo manila with the respondent insurance
company for fire insurance.
o A renewal certificate was issued and a request for the payment of the
corresponding premium.
o The insured, through his wife, promised to pay it which was accepted by
the company but nevertheless, it was not paid.
• The insured’s wife presented a claim for indemnity.
o Respondent did not pay because no payment of premium was made
o Nonetheless, a financial aid was given by the company and was received
by the daughter
o The voucher that was signed stated that the check was in full settlement of
the fire loss under the policy.
o Upon going to the office in order for the signature to be identified, the
company reiterated that the check given was not as an obligation but as a
concession because the renewal premium had not been paid.
o The check was encashed but the company was still sued.

Issue:
Whether or not the non-payment of premium extinguishes the liability of the company

Held:
Yes. No policy issued by an insurance company is valid and binding unless and until the
premium thereof has been paid. Time is of the essence in respect of the payment of the
insurance premium so that if it is not paid the contract does not take effect unless there
is still another stipulation to the contrary. In the instant case, the insured was given a
grace period to pay the premium but the period having expired with no payment made,
he cannot insist that the company is nonetheless obligated to him.
Prior to the amendment, an insurance contract was effective even if the premium had
not been paid so that an insurer was obligated to pay indemnity in case of loss and
correlatively he had also the right to sue for payment of the premium. His policy ceased
to have effect when he failed to pay the premium.
UCPB General Insurance Co. vs. Masagana Telamart Inc.
Facts:
• Respondent obtained 5 insurance policies from the petitioner on its properties in
pasay.
o The properties were razed by fire.
o After a month, payment of manager’s check were made by the respondent
which was accepted but later on returned by the petitioner.
• It was found that the petitioner granted the respondent a 60 to 90-day credit term
for the renewal of the policies which was a practice by both parties up to the time
the claims were filed.

Issue:
Whether or not the practice of payment of premium beyond the renewal period is
binding

Held:
The insurer may grant credit extension for the payment of the premium. If the insurer
has granted the insured a credit term for the payment of the premium and loss occurs
before the expiration of the term, recovery on the policy should be allowed though the
premium is paid after the loss but within the credit term.

There is nothing that prohibits the parties in an insurance contract to provide a credit
term within which to pay the premiums. That agreement is not against the law, morals,
good customs, public order or public policy. The agreement binds the parties.

Estoppel bars it from taking refuge. Respondent relied in good faith of such practice.
Gaisano vs. Development Insurance and Surety Corporation
Facts:
• Petitioner was a registered owner of a Mitsubishi Montero which was insured with
the respondent insurance corporation for a comprehensive commercial vehicle
policy.
o There were two other policies for the petitioners two motor vehicles.
• For the collection of premiums, respondent assigned its agent and informed the
petitioner through its company to which the latter immediately processed the
payment.
o Nobody from the collecting company picked up the check due to a
birthday.
o The vehicle was stolen in the vicinity of sm megamall.
o The collecting agent picked up the check the following day
• Respondent denied the claim on the ground that there was no insurance
contract.
o Respondent refused to pay the proceeds or return the premium paid.
• RTC held in favor of the petitioner while the CA reversed the decision of the trial
court.

Issue:
Whether or not there is a binding contract between the parties

Held:
No. There was no payment of premium at the time of the loss of the vehicle. The notice
of the availability of the check does not produce the effect of payment of the premium.
When the collecting agent informed the petitioner that it will only be able to pick-up the
check the next day, petitioner did not protest to this, but instead allowed it to do so.
Thus, at the time of loss, there was no payment of premium yet to make the insurance
policy effective.
 REINSTATEMENT
Violeta Lalican vs. Insular Life
Facts:
• Eulogio Lalican applied for a life insurance with the respondent.
o The contract states that there is a grace period for the payment of the
premium of 31 days. If the premium remained unpaid until the end of the
grace period, the policy would automatically lapse and become void.
• Eulogio failed to pay.
o He submitted an application for reinstatement together with the payment
for the premium.
o Respondent informed him that the reinstatement cannot be processed
because of the remaining balance of the interest.
o Respondent instructed him to pay the interest and file another application
for reinstatement.
• Eulogio went to the residence of the agent and paid the overdue interest together
with the filing of the second application for reinstatement.
o The husband received the application and issued a receipt for the amount
deposited.
o On the same day, eulogio died of cardio-respiratory arrest secondary to
electrocution.
• Petitioner filed a claim for the proceeds of the insurance.
o Respondent denied claiming that the insurance policy had lapsed at the
time of death.
o That the policy would only be considered reinstated upon the approval of
the application by insular life during the applicants lifetime and in good
health.
• RTC held in favor of the respondent and that the policy had indeed lapsed.

Issue:
Whether or not the deceased was able to successfully reinstate the lapsed insurance
policy on his life before his death
Held:
No. To reinstate a policy means to restore the same to premium-paying status after it
has been permitted to lapse. Both the policy contract and the application for
reinstatement provide for specific conditions for the reinstatement of a lapsed policy.

The additional condition for the reinstatement of a policy was that the policy shall not be
considered as reinstated until the application is approved by the company during the
lifetime and good health and until all other company requirements for the reinstatement
of the policy are fully satisfied.

That the payment in connection with the application shall be considered only as a
deposit and shall not bind the company until the application is approved.

Eulogios death rendered impossible full compliance with the conditions of

reinstatement. The policy could only be considered reinstated after the application for
reinstatement had been processed and approved by insular life during eulogies lifetime
and good health.

The agent did not have the authority to approve the application for reinstatement.
 FIRE INSURANCE
Uy Hy and Co. vs. Prudential Assurance Co.
Facts:
• Petitioner alleges that it is a general mercantile copartnership duly registered in
the city of manila.
o That the respondent is a foreign insurance company.
o That the petitioner acquired a fire insurance for its goods and property
from the respondent.
o That the properties and goods were razed by fire
o Respondent refused to pay the claim without any legal or just ground
• The respondent, in its defense, claims that there was a fraudulent claim or false
declaration which makes the policy null and void.
o That the lost goods or property, majority of which, was not lost to the fire
o That only a small portion was consumed by the fire
• RTC rendered a judgment in favor of the petitioner

Issue:
Whether or not the proof of loss and the particulars of the claim are false and fraudulent
thus preventing the petitioner to recover from the fire insurance

Held:
Yes. There are irregularities in the inventory when it was presented to the inspection
officers such as different quantities which were stated in the inventory and the actual
count during the inspection. There were also additional claims which were present
during the investigation such as the chocolates and the cigars.

Upon asking the manager for the location of the storage of the missing articles, the said
manager could not point out its location. His only explanation is that the merchandise
was completely consumed by fire and that no trace was left.
While it is true that a small portion of the merchandise might have been consumed, and
the evidence of its existence completely destroyed and some evidence would be left by
which the amount, kind and quality of it could be substantially ascertained and
determined.

The insured made a claim for a large amount of property which was never in the
bodegas at the time of the fire and for a much larger amount of property than was
actually in the bodegas, it makes the whole claim false and fraudulent, the legal effect of
which is to bar plaintiff from recovery of the amount of its actual loss.
 MOTOR VEHICLE INSURANCE
Perla Compania De Seguros vs. CA
Facts:
• Private respondent Herminio Lim executed a promissory note to be paid in
monthly installments for a motor vehicle insurance with the petitioner.
o The car was carnapped while parked at the back of broadway centrum
while being used by the wife, Evelyn Lim.
o Private respondent filed a claim for loss but was denied on the ground that
the driver’s license of Evelyn Lim was expired at the time of loss and that
there was a violation of the driver clause.

Issue:
Whether or not the driver clause can be made applicable in case of theft in motor
vehicle insurance contracts

Held:
No. The risk against accident is distinct from the risk against theft. The authorized driver
clause is in contemplation or anticipation of accident in the legal sense in which it
should be understood, and not in contemplation or anticipation of an event such as
theft.
 THEFT CLAUSE
Paramount Insurance Corp. vs. Spouses Yves and Maria Teresa Remonduelaz
Facts:
• Respondents insured their Toyota corolla for comprehensive motor vehicle
insurance with the petitioner.
o The car was unlawfully taken
o It was alleged that a certain Ricardo Sales took the vehicle to add
improvements and accessories thereon but failed to return the car within 3
days
o Respondents was awarded the proceeds from various insurance
companies with regard to the same subject which contravenes the
principle that the insured may not recover more than its interest in any
property subject of an insurance.
▪ The cars are different from that insured with the other company

Issue:
Whether or not the petitioner is liable for the loss of the vehicle due to the respondents
entrusting its possession to another person

Held:
Yes. Sales did not have juridical possession over the vehicle. It is apparent that the
taking of the vehicle is without any consent or authority from the former. Records show
that the extent of the authority is to introduce improvements and not to permanently
deprive them of possession thereof.

The theft is covered by the insurance policy which is compensable.

Alpha Insurance and Surety Co. vs. Arsenia Sonia Castor
Facts:
MORTGAGE REDEMPTION INSURANCE
Great Pacific Life Assurance Corporation vs. CA
LIABILITY OF INSURER FOR LOSS DUE TO NEGLIGENCE
FGU Insurance Corp. vs. CA