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ARTICLE VII: Executive
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BILL OF RIGHTS: Rights of an
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Great Paci!c Life vs. CA
(0
316 SCRA 677 (1999)
INSURANCE LAW: Parties in Insurance Contract
FACTS:
Great Pacific Life Assurance Corporation (Grepalife) executed a contract of group life insurance
with Development Bank of the Philippines (DBP) wherein Grepalife agreed to insure the lives of
eligible housing loan mortgagors of DBP.
One such loan mortgagor is Dr. Wilfredo Leuterio. In an application form, Dr. Leuterio answered
questions concerning his test, attesting among others that he does not have any heart
conditions and that he is in good health to the best of his knowledge.
However, after about a year, Dr. Leuterio died due to massive cerebral hemorrhage. When DBP
submitted a death claim to Grepalife, the latter denied the claim, alleging 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.
Hence, the widow of the late Dr. Leuterio filed a complaint against Grepalife for Specific
Performance with Damages. Both the trial court and the Court of Appeals found in favor of the
widow and ordered Grepalife to pay DBP.
ISSUE:
Whether the CA erred in holding Grepalife liable to DBP as beneficiary in a group life
insurance contract from a complaint filed by the widow of the decedent/mortgagor
HELD:
The rationale of a group of insurance policy of mortgagors, otherwise known as the mortgage
redemption insurance, is a device for the protection of both the mortgagee and the mortgagor.
On the part of the mortgagee, it has to enter into such form of contract so that in the event of
the unexpected demise of the mortgagor during the subsistence of the mortgage contract, the
proceeds from such insurance will be applied to the payment of the mortgage debt, thereby
relieving the heirs of the mortgagor from paying the obligation. In a similar vein, ample
protection is given to the mortgagor under such a concept so that in the event of death, the
mortgage obligation will be extinguished by the application of the insurance proceeds to the
mortgage indebtedness. In this type of policy insurance, the mortgagee is simply an appointee
of the insurance fund. Such loss-payable clause does not make the mortgagee a party to the
contract.
The insured, being the person with whom the contract was made, is primarily the proper person
to bring suit thereon. Subject to some exceptions, insured may thus sue, although the policy is
taken wholly or in part for the benefit of another person, such as a mortgagee.
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, the widow of the decedent Dr. Leuterio may file the
suit against the insurer, Grepalife.
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