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G.R. No.

L-10436 January 24, 1916

The question to be determined in this suit consists in whether the
FRANCISCA EGUARAS, plaintiff-appellee, life insurance obtained by Dominador Albay, with the assistance of
vs. the insurance agent, Ponciano Remegio, is legal and valid or whether
THE GREAT EASTERN LIFE ASSURANCE COMPANY, LTD., and WEST on the contrary it was issued through fraud and deceit, and in such
G. SMITH, defendants. case, whether the defendant, The Great Eastern Life Assurance
THE GREAT EASTERN LIFE ASSURANCE COMPANY, LTD., appellant. Company, Ltd., is still under obligation to pay the value thereof to
the plaintiff.
Crossfield and O'Brien for appellant.
Pedro Guevara for appellee. It is demonstrated in the case by evidence submitted by the plaintiff
that on October 14, 1912, through the efforts of the defendant
TORRES, J.: company's agent, Ponciano Remigio, Dominador Albay got the
insurance company to insure his life for the sum of P5,000 and that
This is an appeal filed through bill of exceptions by the counsel for through the representations and statements made by said
the defendant, the Great Eastern Life Assurance Company, Ltd., Dominador Albay in his application and the favorable medical
from the judgment of September 14, 1914, whereby the Court of examination made by Dr. Jose A. Vidal (record, p. 126), the company
First Instance of Laguna sentenced it to pay to the plaintiff the sum agreed to the life insurance sought, and on November 6,. 1912,
of P5,000, the value of the insurance policy in question, with legal issued the policy No. 5592, the value whereof was payable to the
interest from April 15, 1913, the date when the complaint was filed, insured's mother-in-law, Francisca Eguaras. One month after said
and the costs. W.G. Smith was absolved from the complaint, and the insurance policy had been issued, that is, on December 6, 1912, the
claim fro damages dismissed, as they were not proven. insured Dominador Albay died in the municipality of Santa Cruz,
Laguna, of intestinal occlusion, according to the certificate of Dr. R.
On April 14, 1913, counsel for Francisca Eguaras filed a written Kamatoy, after an illness of three days, wit medical attendance.
complaint in the said Laguna court, alleging as a cause of action that (Exhibit B, p. 154; Exhibit B, criminal case No. 2616.) The defendant
about October 14, 1912, her son-in-law Dominador Albay had company, according to the declaration of its own agent in these
applied in writing to the defendant insurance company to insure his Islands, despite having received satisfactory proofs of the death of
life for the sum of P5,000, naming as the beneficiary in case of his the insured, refused to pay the amount of the insurance, alleging
death the plaintiff Francisca Eguaras; that after compliance with the that it had been secured through fraud and deceit and was therefore
requisites and the investigation carried on by the defendant illegal and void.
company, and it had been satisfied concerning the physical
condition of the applicant, it accepted the application for insurance The contract of life insurance executed between The Great Eastern
and on November 6, 1912, issued policy No. 5592, Exhibit A, which Life Assurance Company, Ltd., and Dominador Albay is set forth in
has been made a part of the complaint, whereby the said insurance the policy itself and in the original and supplementary applications
company insured the life of the said Dominador Albay in the sum of signed apparently by Dominador Albay, it appearing to have been
P5,000, payable in the event of his death to Francisca Eguaras; that stipulated that "This insurance is granted in consideration of the
on December 6, 1912, said policy No. 5592 being in force, the foregoing statements and agreement in the application presented to
insured Dominador Albay, died in the municipality of Santa Cruz, obtain this policy, which application forms a part of the present
Laguna, and despite the fact that the beneficiary submitted contract." This condition is repeated in Clause VIII of the conditions
satisfactory proofs of his death and that the defendant company and the privileges granted to the insured, that "This policy and the
investigated the event, still it refused and continues to refuse to pay application presented to secure it, taken together, constitute the
to the plaintiff the value of the policy, Exhibit A, thereby causing whole contract, which cannot be altered except in writing by the
damages estimated at P1,000. The court was therefore asked to general manager or some person expressly appointed therefor by
render judgment against the Great Eastern Life Assurance Company, the board of directors."
Ltd., and its general agent, West G. Smith, by sentencing them to
pay to the plaintiff the sum of P5,000, the value of policy No. 5592, Now then, in the supplementary application presented by the
plus the sum of P1,000 for damages inflicted upon them, in addition insured on October 14, 1912, to the question: "Do you think that
to the costs of the suit. you are free from disease and that you have a good constitution?"
he answered: "Yes;" and to another question: "Have you suffered
The demurrer filed to the foregoing complaint having been from any affection of ... (c) Chest Cough, asthma, spitting blood,
overruled, counsel for the insurance company and for West G. Smith pleurisy?" the applicant answered: "No." (p. 126.)
replied thereto, admitting the allegations of the complaint with
respect to the legal status of the parties by denying all the rest, and The physician of the insurance company in charge of the physical
setting forth in special defense that the insurance policy issued in examination of the person applying for insurance in Laguna, Dr. Jose
the name of Dominador [Albay] had been obtained through fraud A. Vidal, made the physical examination of the person who
and deceit known and consented to by the interested parties and is presented himself to him as Dominador Albay and in his report to
therefore completely illegal, void, and ineffective; wherefore he the said company (pp. 126-127), dated October 14, 1912, he
prayed that the defendants be absolved from the complaint, with recorded that the development, expansion, percussion, and
the costs against the plaintiff. auscultation of the applicant's chest were "normal" and
recommended to the company that it could "take the risk" of
In answer to the reply of the defendants the plaintiff alleged that insuring the applicant Dominador Albay and on said professional
the grounds set forth in the special defense had been made the report a certain Lunn, who must be the medical officer of the
basis of a criminal complaint against the plaintiff, Francisca Eguaras, company, placed his O.K. On the basis of these medical reports and
and Ponciano Remegio for the crime of frustrated estafa in the Court of the exact and faithful performance of its obligations on the part of
of First Instance of Laguna, but that they had been acquitted on said the insurance agent, Ponciano Remigio, The Great Eastern Life
complaint, as is demonstrated by the copy of the judgment, marked Assurance Company issued the corresponding policy in favor of
Exhibit b, which was made an integral part of the answer, and Dominador Albay, insuring his life for P5,000. The first premium,
therefore the plaintiff prayed that the relief sought in her complaint amounting to P82.25, was paid on November 6, 1912, and while said
be granted. policy was in full force and effect the death of the death of the
insured Albay occurred the next month.
After trial and examination of the evidence submitted by both
parties, the court rendered the judgment that has been set forth, It appears from the record that the insured had knowledge of the
whereto the defendant, The Great Eastern Life Assurance Company, false replied contained in the two applications for insurance and
Ltd., saved its exception, and in writing moved for a reopening of the knowing permitted fraud to be practised upon the insurance
case and a new trial. This motion was denied, with exception on company, for in his acknowledgment and consent his mother-in-law
appellant's part, so the corresponding bill of exceptions was filed, was designated as the beneficiary of the insurance, despite the fact
approved and forwarded to the clerk of this court. that he had children and his mother was still living. In the present
case the fraud consisted in the fact that a healthy and robust person had told him the details of the substitution of another person in
was substituted in place of insured invalid when Dr. Vidal made the place of Dominador Albay at the examination made by the physician
physical examination of the one who seeking to be insured, for the of the company, and that the cedulas of said Albay and two letters
real person who desired to be insured and who ought to have been (pp. 171, 173), in which authentic signatures of Albay appeared,
examined was in bad health on and before the date of executing the were delivered to Attorney O'Brien by Albay's mother, named
insurance contract of which facts the insured Dominador Albay and Manuela Flores. Captain Barrows of the Constabulary testified how
the insurance agent Ponciano Remigio had full knowledge. Ponciano Remegio had promised O'Brien in a conference held by the
three in his house in Santa Cruz some ten days before the trial, that
The insurance company endeavored to prove by means of cross- on the day of the trial he would testify that the person who had
examination of Ponciano Remigio, while he was testifying as a signed the applications with the name of Dominador Albay was
witness for the plaintiff, and by means of the declaration of another Castor Garcia, who was then outside of the Philippine Islands (p. 35).
insurance agent, Jose D. Arce, that said Ponciano Remigio had It is true that said Remegio denied all this in his testimony given at
always been in the habit of securing the insurance of sick persons, the trial in favor of the plaintiff, but it is to be observed that the said
who died shortly after it was issued, in fraud and to the serious Remegio in March, 1914, told Attorney O'Brien in his office in Manila
injury of the defendant company; but at the request of the that the person who had signed the insurance applications had left
opposition party the court overruled this attempt of the defendant the Philippines, but afterwards he stated to said O'Brien and
and did not permit proof of specific fraudulent acts performed by its Barrows that the person mentioned was Castor Garcia, and it the
agent Remegio. It is to be observed that the said Remegio has said Remegio did not so testify at the trial it was through fear of
already been convicted of the crime of estafa and sentenced to two being prosecuted for perjury.
months and one day of arresto and to the restitution of P20 to The
Insular Life Insurance Company, as stated in the copy of the Dr. Getrudo Reyes stated at the trial that in March, 1912, he had
sentence. (Record, p. 158.) been consulted by Dominador Albay regarding the cough he had and
after a medical examination witness had reached the conclusion that
It is unquestionable that the person who on October 14, 1912, the person concerned was suffering from tuberculosis in the first
presented himself to Dr. Vidal to be examined under the name of stage, although it does not appear that said physician made a
Dominador Albay, and who signed the supplementary application microscopic analysis of the patient's sputum; but there is
before said physician, was not the real Dominador Albay, who died circumstantial evidence in the case that the said Dominador Albay
on December 6, 1912. In case No. 2616, prosecuted against died of tuberculosis, for his own mother, Manuela Flores, so
Ponciano Remegio, Castor Garcia, and Francisca Eguaras for affirmed in the affidavit (p. 199) drawn up before a notary on April
frustrated estafa, part of which was exhibited at the hearing in this 17, 1914, although said affidavit was not admitted as evidence
suit, Dr. Vidal testified that on October 14, 1912, while he was in the because she repudiated its contents in the courts. The motive for
employ of the defendant company as a physician, he proceeded to this change of front on the part of the said Manuela Flores seems to
examine, in San Pablo, Laguna, a person presented to him by the have been due to the fact that the insurance company was unwilling
insurance agent, Ponciano Remegio, who said that such person was to give her and her husband money for the statements they would
named Dominador Albay and desired to insured; that after he had make in the court, for in the letter (Exhibit 9) of Leodegario v.
conducted the examination for the space of about an hour the Lambonga, Manuela Flores' husband, addressed to Jose D. Arce on
person examined by him signed the supplementary application August 26, 1914, Lambonga informed Arce that they would not
(Exhibit F) with the name of Dominador Albay; that the person appear the next day, not saying where, because they first wanted to
whom he examined and who signed the application with the name agree upon the sum that they would receive in the event Smith,
of Dominador Albay, if he were not mistaken, was the individual he defendant's agent, should win the case, and accordingly it execute
saw before him, the accused Castor Garcia. When he saw urged to "an instrument we can hold to" (literal). Jose Valencia testified that
state positively whether he had any doubt that the person he had on November 27, 1912, he went to the municipal building to sign a
examined was the accused Castor Garcia, he first asked permission declaration in the name Dominador Albay because the latter was
to examine the latter's body, and finally reaffirmed that, judging then ill and could not leave his house a fact admitted by plaintiff.
from the general appearance of the accused, Castor Garcia, the Attorney O'Brien also testified that Ponciano Remegio had assured
latter was the very person he had examined in San Pablo and that he him that Dominador Albay was suffering from tuberculosis, and also
had assured Major Grove of the Constabulary and the attorney of that Remegio had told him that there was a physician in Santa Cruz,
the defendant company that said Garcia was the person who had who must have been Dr. Reyes, that could attest that said Albay was
presented himself to him, saying that his name was Dominador really affected with tuberculosis.
Albay. He further stated that about March 24, 1913, Ponciano
Remegio had visited his house in Manila to request that he should It is immaterial that Albay may have died of intestinal occlusion, as
testify in favor of said Remegio, who at the same time had offered Dr. Kamatoy affirms in the death certificate (p. 154), because said
him P600 not to identify the person of Castor Garcia at the trial. aliment does not demonstrate that Albay was not suffering from
Major Grove of the Constabulary affirmed under oath at the trial of some other chronic disease; or that in the month of October, 1912,
the same case that on April 4, 1913, when Dr. Vidal and the accused when he applied for insurance on his life, he was not affected by
Castor Garcia were in his house, Dr. Vidal had told him that he had malady that would have been sufficient cause for his rejection by
not the least doubt that Castor Garcia was the person whom he had the physician of the insurance company.
examined in San Pablo.
To secure the insurance on the life of Dominador Albay, the parties
Attorney O'Brien, among other things, stated in a sworn declaration, interested used a person who signed the name of Dominador Albay
that Ponciano Remegio interviewed him in his office about March as the insured in all the documents connected with his application,
15, 1914, telling him that the signatures affixed to the original for the signatures to the letter and the document relating to the
application for insurance and the supplementary application signed insurance, exhibited at the trial, and signed by "Dominador Albay"
before Dr. Vidal at the time of the physical examination were false, (pp. 50, 54), are different from the authentic signatures of the real
and then indicated where he could get documents with authentic Dominador Albay which appear in the official documents and the
signatures of the said Albay. Remegio further told him that he instruments of conveyance of reality. (Exhibits 12, 13, 15, pp. 207-
(Remegio) was disgusted with his accomplices because they could 211 of the record.) The signatures on these three documents of an
not reach an agreement regarding the distribution among them of official nature, as well as those on the letters (Exhibits 7 and 8; pp.
the amount of the policy when it should be collected. All the 171, 173) addressed by the said Albay to his sister Odang and his
statements of said Remegio were made before him under oath as a relative Lambonga, although not admitted as evidence because they
notary public in the presence of Jose D. Arce, which statements were not duly identified are the genuine signatures of the real
were annotated in the memorandum, Exhibit 3, he being unable to Dominador Albay, who was accustomed to fashion his letters in the
draw up a formal document for signature as the day of the interview Spanish style of handwriting. The documents exhibited under the
was Sunday and he had no stenographer in his office. Jose D. Arce letters D, E, F, and G by the plaintiff, which bear the signatures of
corroborated the statements of the foregoing witness, and added "Dominador Albay," appear to have been signed by the same hand,
that as the said Ponciano Remegio lodged in his house, the latter and therefore it is not strange that the signatures on these
documents are similar, for it is to be observed that the characters in Albay was in good health and possessed the qualifications required
these signatures are firm and strong, demonstrating that the person by said insurance company for perfecting the contract, so the
who made them had learned to write in American schools where the company freely and willingly consented to the execution thereof,
style of handwriting taught is very different from the Spanish. effectively induced thereto by the result of the medical examination
and of the favorable professional report issued in view of the
Plaintiff's claim is based especially on the genuineness of the appearance of an individual who was in good health, but different
signatures of "Dominador Albay" in the elector's oath (Exhibit G, p. from the individual who was seeking to be insured and who died one
124), which was signed before the board of election inspectors on month and twenty-three days after the insurance had been granted.
May 4, 1912, and duly identified by the chairman of said board,
Proceso Maximo, on the contention that if the signature on said The fraud which gave rise to the mistaken consent, given by the
elector's oath is genuine, those which appear on the insurance defendant company to the application for insurance made by Albay
applications, Exhibits E and F (pp. 125-127), and that affixed to the and to the execution of the contract through deceit, is plain and
letter, Exhibit D (p. 50), addressed by said Albay in November, 1912, unquestionable. This fraud consisted in the substitution at the
to the insurance also be true and genuine. But if the real Dominador examination of Castor Garcia in place of the insured Dominador
Albay wrote in the Spanish style in the months of January, February, Albay, and as the deceit practiced in the said contract is of a serious
and March of the year 1912, as demonstrated by the signatures nature, the same is ipso facto void and ineffective, in accordance
affixed to the documents Exhibits 7, 8, and 15, it is impossible to with the provisions of article 1270 of the Civil Code.
believe that he should have radically changed his form of writing,
two months later by adopting a different handwriting, as can be If there had been no substitution, if the insured Dominador Albay
seen in the alleged signature, said to be authentic, in the elector's had been the person who appeared and was examined by the
oath, Exhibit G, written on May 4, 1912, and subsequently imitated physician Vidal, said Albay being manifestly different from Castor
in the months of October and November of the same year in the Garcia, the said physician would not have affirmed at the trial that it
Exhibits E, F, and D. The signatures that appear on the papers was Garcia who presented himself for the physical examination,
referring to the insurance are so different from those which appear accompanied by the insurance company's agent, at his residence in
on the other documents which unquestionably bear the signature of San Pablo, and he would have failed to recognize him when he saw
the real Dominador Albay that, in consideration of the short time him in the court, nor is any mistake on the physician's part possible
which elapsed between the last genuine signature in March, 1912, as the inspection and physical examination of the individual lasted
when he sold a tract of land, and his oath as elector in May of the for something like the space of an hour.
same year 1912, and the great difference that exist between the two
signatures, we can do no less than reach the conclusion already The supposition that Dominador Albay was not ill in October, 1912,
stated that there was a person who passed himself off as Dominador would not explain why he did not present himself in person to be
Albay and said person was the one who went to signing the examined by the physician Vidal; and when he failed to do so and by
documents relating to the alleged insurance of Dominador Albay agreement with the agent Remegio was willing to be substituted by
who died on December 6, 1912. Castor Garcia to the end that in any event no defect or personal
quality should be discovered to hinder the perfecting of the
Moreover, Dominador Albay's age, according to the alleged insurance contract, such a change in the person constitutes one of
insurance application and the insurance policy, was 40 years in 1912, the means of fraud which, although it may not partake of the nature
while according to his personal cedulas he was only 32 years of age of a crime, essentially nullifies the insurance contract executed.
in 1911, so that when he was insured he must have been only 33.
With this array of circumstantial evidence derived from facts duly
It is therefore proven that the signatures on the insurance proven as a result of the present suit, we get, if not a moral
applications reading "Dominador Albay" are false and forged; that certainly, at least a full conviction that when Castor Garcia
the person who presented himself to Dr. Vidal to be examined was presented himself to be examined by the physician Vidal in place of
not the real Dominador Albay, but another different person; that at Dominador Albay, serious deceit occurred in perfecting the
the time of the application for insurance and the issuance of the insurance contract, for had the agent of the company not been
policy which is the subject matter of this suit the real Dominador deceived it would not have granted the insurance applied for by
Albay was informed of all those machinations, wherefore it is plain Albay, nor would it have executed the contract by virtue of whereof
that the insurance contract between the defendant and Dominador payment is claimed of the value of policy obtained through fraud;
Albay is null and void because it is false, fraudulent and illegal. and consequently on such assumptions it is improper, nor is it
permitted by the law, to order collection of the amount claimed.
Article 1269 of the Civil Code states:
With reference to the effect produced by the final judgment
There is deceit when by words or insidious machinations on the part rendered in the cae for estafa in connection with this suit, it is
of one of the contracting parties the other is induced to execute a unquestionable that said judgment does not give rise to the
contract which without them he would not have made. presumption of res adjudicata, applicable to the present case (art.
1252, Civil Code), nor does it constitute an estoppel to the matters
It is essential to the nature of the deceit, to which the foregoing litigated in the said criminal case for estafa and consequently there
article refers, that said deceit be prior to or contemporaneous with cannot be applied in the present suit the principle laid down in the
the consent that is a necessary requisite for perfecting the contract, decision of Pealosa vs. Tuason (22 Phil. Rep., 303), for the reason
but not that it may have occurred or happened thereafter. A that said case was instituted by virtue of an information on the
contract is therefore deceitful, for the execution whereof the charge that the deceitful acts executed by the company's agent and
consent of one of the parties has been secured by means of fraud, others interested in the result of the fraud constitute the crime of
because he was persuaded by words or insidious machinations, estafa to the injury of the said insurance company, even though the
statements or false promises, and a defective consent wrung from court acquitted the accused on account of the lack of satisfactory
him, even though such do not constitute estafa or any other criminal proof of the acts ascribed to them and of their guilt, while the
subject to the penal law. exception taken by the defendant company is based on the nullity of
the insurance contract because deceit occurred in the perfecting and
The defendant company accepted the application for insurance execution thereof.
made by Dominador Albay and executed the contract comprised
under articles 416 of the Code of Commerce, although for the In view of that acquittal the beneficiary of the insurance, Francisca
perfecting thereof the insured, Albay, as he was not in good health, Eguaras, instituted the present suit against The Great Eastern Life
by connivance with the insurance company's agent, presented Assurance Company, Ltd., claiming payment of the sum of P5,000,
Castor Garcia to the physician Vidal, who was commissioned by the the value of policy No. 5592, Exhibit A, which claim the defendant
company to examine applicants for life insurance and in view of the opposed with the contention that said policy was void and illegal
favorable report of the said physician, who reported and certified because it had been obtained by means of deceit and fraud.
that the person examined by him under the name of Dominador
The judgment of acquittal rendered in the criminal case for estafa 3. That the two policies aforementioned were valid and subsisting at
against the said Francisca Eguaras does not produce the effect of res the time of the death of the insured on December 30, 1932; the fact
adjudicata in the present suit to the extent that because she was of said death is evidenced by the accompanying death certificate
acquitted of the crime of estafa she has necessarily acquired as a issued by the Civil Register of Pasay, Rizal, which is marked as Exhibit
plaintiff the right to collect the value of the insurance, or that the C;
insurance company cannot contend that the insurance contract is
null and void because it was executed by means of deceit, which 4. That the plaintiffs herein are the beneficiaries in said policies,
upon being proven, as it has been in this case, invalidates the Segundina Musgi of Policy No. 129454, and Buenaventura Garcia of
contract that gave rise to the obligation to pay the value of said Policy No. 130381;
5. That demand was made upon the defendant company for the
In the said criminal case the question raised was whether the acts payment of the two policies above referred to, but the defendant
performed by Eguaras and her co-accused partook of the nature of company refused to pay on the grounds stated in the answer.
the crime of estafa, and when it was decided in the negative, the
said Eguaras was not therefore unquestionably entitled to collect The two policies were issued upon applications filed by the insured
the value of the insurance, for after deceit had once been proven in on July 20, 1931 and October 15, of the same year, respectively. In
the contract, no obligation rested upon the insurance company to both applications, the insured had to answer inquiries as to his state
pay the sum stipulated. of health and that of his family, which he did voluntarily. In each of
the said applications the following question was asked: "1. What
In the present civil suit it is not a question whether the acts physician or practitioner or any other person not named above have
performed by Eguaras and others interested in the proceeds of the you consulted or been treated by, and for what illness, or ailment?
insurance were criminal, but whether in taking out the insurance on (If none, so state.)" In the first application, the insured answered
the life of Dominador Albay there occurred in the operation deceit "None", and in the second, "No". These answers of the insured as
and fraud of a civil nature, in the form and under the conditions well as his other statements contained in his applications were one
defined by the Civil Code. of the causes or considerations for the issuance of the policies, and
they so positively appear therein. After the death of the insured and
In a contract executed with the requisites fixed in article 1261, one as a result of the demand made by the beneficiaries upon the
of the contracting parties may have given his consent through error, defendant to pay the value of the policies, the latter discovered that
violence, intimidation, or deceit, and in any of such cases the the aforementioned answers were false and fraudulent, because the
contract is void, even though, despite this nullity, no crime was truth was that the insured, before answering and signing the
committed. (Article 1265, Civil Code.) There may not have been applications and before the issuance of the policies, had been
estafa in the case at bar, but it was conclusively demonstrated by treated in the General Hospital by a lady physician for different
the trial that deceit entered into the insurance contract, fulfillment ailments. It indisputably appears that between May 13 and 19, 1929,
whereof is claimed, and therefore the conclusions reached by the the insured had entered the General Hospital in Manila, and was
court in the judgment it rendered in the criminal proceedings for treated by Doctor Pilar V. Cruz for peptic ulcer and chronic catarrhal
estafa do not affect this suit, nor do they influence the decision nasopharyngitis; on August 5, 1930, he entered the same hospital
proper herein, nor can they produce in the present suit, over the and was treated by the same physician for chronic pyelocystitis and
exception of the defendant, the force of res adjudicata. for incipient pulmonary tuberculosis; on the 13th of the same month
he returned to the hospital and was treated by the same physician
For all the foregoing reasons the first part of the judgment appealed for chronic suppurative pyelocystitis and for chronic bronchitis; on
from, with reference to the payment of P5,000 to the plaintiff, must the 20th of the same month he again entered the hospital and was
be reversed and the defendant, The Great Eastern Life Assurance treated by the same doctor for acute tracheo-bronchitis and chronic
Company, Ltd., absolved from the complaint, as we do absolve it; suppurative pyelocystitis; on the 27th of the same month he again
and we affirm the second part of said judgment in so far it absolves entered the same hospital and was treated for the same ailments;
W. G. Smith and dismissed the petition for damages; without special on December 11, 1930, he again entered the hospital and was
finding as to the costs in both instances. So ordered. treated for the same ailments; on the 18th of the same month, he
again entered the hospital and was treated for the same ailments;
G.R. No. L-41794 August 30, 1935 on the 28th of the same month he again entered the hospital and
was treated for the same ailments, and, finally, on January 11, 1931,
SEGUNDINA MUSGI, ET AL., plaintiffs-appellees, he again entered the hospital and was treated by the same doctor
vs. for the same ailments.
WEST COAST LIFE INSURANCE CO., defendant-appellant.
The defendant contended at the outset that the two policies did not
Courtney Whitney for appellants. create any valid obligation because they were fraudulently obtained
Laurel, Del Rosario and Sabido for appellees. by the insured. The appealed decision holds that the health of the
insured before the acceptance of his applications and the issuance
IMPERIAL, J.: of the policies could neither be discussed nor questioned by the
defendant, because the insured was examined by three physicians of
The plaintiffs, as beneficiaries, brought suit against the defendant to the company and all of them unanimously certified that he was in
recover the value of two life insurance policies. The defendant good health and that he could be properly insured. The question
appealed from a judgment sentencing it to pay the plaintiffs the here is not whether the physicians' reports or the answers which the
amount of said policies, and the costs. insured gave to them relative to his health were correct or not. It is
admitted that such information was substantially correct, in the
The principal facts of the case are embodied in the following written sense that the physicians of the defendant who examined the
stipulation entered into by the parties: insured, for failure to make a detailed examination, did not discover
the ailments suffered by the insured. However, the question raised
1. That Arsenio T. Garcia was insured by the defendant company in for our determination is whether the two answers given by the
the sum of P5,000 as evidenced by Policy No. 129454 effective as of insured in his applications are false, and if they were the cause, or
July 25, 1931, hereby attached and marked as Exhibit A; one of the causes, which induced the defendant to issue the policies.
On the first point, the facts above set out leave no room for doubt.
2. That the said Arsenio T. Garcia was again insured by the The insured knew that he had suffered from a number of ailments,
defendant company in the sum of P10,000 effective as of October including incipient pulmonary tuberculosis, before subscribing the
20, 1931, as evidenced by Policy No. 130381 hereby attached and applications, yet he concealed them and omitted the hospital where
marked as Exhibit B; he was confined as well as the name of the lady physician who
treated him. That this concealment and the false statements
constituted fraud, is likewise clear, because the defendant by reason
thereof accepted the risk which it would otherwise have flatly information as to encumbrances even though no questions were
refused. When not otherwise specially provided for by the Insurance asked. And if insured while being examined for life insurance, and
Law, the contract of life insurance is governed by the general rules knowing that she had heart disease, falsely stated that she was in
of the civil law regarding contracts. Article 1261 of the Civil Code good health, and though she could not read the application, it was
provides that there is no contract unless there should be, in addition explained to her and the questions asked through an interpreter,
to consent and a definite object, a consideration for the obligation and the application like the policy contained a provision that no
established. And article 1276 provides that the statement of a false liability should be incurred unless the policy was delivered while the
consideration shall render the contract void. The two answers being insured was in good health, the court properly directed a verdict for
one of the considerations of the policies, and it appearing that they the insurer, though a witness who was present at the examination
are false and fraudulent, it is evident that the insurance contracts testified that the insured was not asked whether she had heart
were null and void and did not give rise to any right to recover their disease.
value or amount. A similar case was already decided by this court in
Argente vs. West Coast Life Insurance Co. (51 Phil., 725). In that case xxx xxx xxx
the insured concealed from the physician who examined her that
she had consulted and had been treated by another physician for "The basis of the rule vitiating the contract in cases of concealment
cerebral congestion and Bell's Palsy, and that she was addicted to is that it misleads or deceives the insurer into accepting the risk, or
alcohol, so much so that on one occasion she was confined in the accepting it at the rate of premium agreed upon. The insurer, relying
San Lazaro Hospital suffering from "alcoholism"; this court held that upon the belief that the assured will disclose every material fact
such concealments and false and fraudulent statements rendered within his actual or presumed knowledge, is misled into a belief that
the policy null and void. In discussing the legal phase of the case, this the circumstance withheld does not exist, and he is thereby induced
court said: to estimate the risk upon a false basis that it does not exist. The
principal question, therefore, must be, Was the assurer misled or
One ground for the rescission of a contract of insurance under the deceived into entering a contract obligation or in fixing the premium
Insurance Act is a "concealment", which in section 25 is defined as of insurance by a withholding of material information or facts within
"A neglect to communicate that which a party knows and ought to the assured's knowledge or presumed knowledge?
communicate". Appellant argues that the alleged concealment was
immaterial and insufficient to avoid the policy. We cannot agree. In "It therefore follows that the assurer in assuming a risk is entitled to
an action on a life insurance policy where the evidence conclusively know every material fact of which the assured has exclusive or
shows that the answers to questions concerning diseases were peculiar knowledge, as well as all material facts which directly tend
untrue, the truth or falsity of the answers become the determining to increase the hazard or risk which are known by the assured, or
factor. If the policy was procured by fraudulent representations, the which ought to be or are presumed to be known by him. And a
contract of insurance apparently set forth therein was never legally concealment of such facts vitiates the policy. "It does not seem to be
existent. It can fairly be assumed that had the true facts been necessary ... that the ... suppression of the truth should have been
disclosed by the assured, the insurance would never have been willful." If it were but an inadvertent omission, yet if it were material
granted. to the risk and such as the plaintiff should have known to be so, it
would render the policy void. But it is held that if untrue or false
In Joyce, The Law of Insurance, second edition, volume 3, Chapter answers are given in response to inquiries and they relate to
LV, is found the following: material facts the policy is avoided without regard to the knowledge
or fraud of assured, although under the statute statements are
"Concealment exists where the assured has knowledge of a fact representations which must be fraudulent to avoid the policy. So
material to the risk, and honesty, good faith and fair dealing requires under certain codes the important inquiries are whether the
that he should communicate it to the assured, but he designedly and concealment was willful and related to a matter material to the risk.
intentionally withholds the same.
xxx xxx xxx
"Another rule is that if the assured undertakes to state all the
circumstances affecting the risk, a full and fair statement of all is "If the assured has exclusive knowledge of material facts, he should
required. fully and fairly disclose the same, whether he believes them material
or not. But notwithstanding this general rule it will not infrequently
"It is also held that the concealment must, in the absence of happen, especially in life risks, that the assured may have a
inquiries, be not only material, but fraudulent, or the fact must have knowledge actual or presumed of material facts, and yet entertain
been intentionally withheld; so it is held under English law that if no an honest belief that they are not material. ... The determination of
inquiries are made and no fraud or design to conceal enters into the the point whether there has or has not been a material concealment
concealment the contract is not avoided. And it is determined that must rest largely in all cases upon the form of the questions
even though silence may constitute misrepresentation or propounded and the exact terms of the contract. Thus, where in
concealment it is not of itself necessarily so as it is a question of fact. addition to specifically named diseases the insured was asked
Nor is there a concealment justifying a forfeiture where the fact of whether he had had any sickness within ten years, to which he
insanity is not disclosed no questions being asked concerning the answered "No", and it was proven that within that period he had
same. . . . had a slight attack of pharyngitis, it was held a question properly for
the jury whether such an inflammation of the throat was a
"But it would seem that if a material fact is actually known to the "sickness" within the intent of the inquiry, and the court remarked
assured, its concealment must of itself necessarily be a fraud, and if on the appealed decision that if it could be held as a matter of law
the fact is one which the assured ought to know, or is presumed to that the policy was thereby avoided, then it was a mere devise on
know, the presumption of knowledge ought to place the assured in the part of insurance companies to obtain money without rendering
the same position as in the former case with relation to material themselves liable under the policy. . . .
facts; and if the jury in such cases find the fact material, and one
tending to increase the risk, it is difficult to see how the inference of ". . . The question should be left to the jury whether the assured
a fraudulent intent or intentional concealment can be avoided. And truly represented the state of his health so as not to mislead or
it is declared that if a material fact is concealed by assured it is deceive the insurer; and if he did not deal in good faith with the
equivalent to a false representation that it does not exist and that insurer in that matter, then the inquiry should be made, Did he
the essentials are the truth of the representations whether they know the state of his health so as to be able to furnish a proper
were intended to mislead and did insurer accept them as true and answer to such questions as are propounded. A Massachusetts case,
act upon them to his prejudice. So it is decided that under a if construed as it is frequently cited, would be opposed to the above
stipulation voiding the policy for concealment or misrepresentation conclusion; but, on the contrary, it sustains it, for the reason that
of any material fact or if his interest is not truly stated or is other symptoms of consumption had so far developed themselves within a
than the sole and unconditional ownership the facts are few months prior to effecting the insurance as to induce a
unimportant that insured did not intend to deceive or withhold reasonable belief that the applicant had that fatal disease, and we
should further construe this case as establishing the rule that such a that the foregoing declarations constituted "a further basis for the
matter cannot rest alone upon the assured's belief irrespective of issuance of the policy."
what is a reasonable belief, but that it ought to be judged by the
criterion whether the belief is one fairly warranted by the The question at issue is whether or not the insured made such false
circumstances. A case in Indiana, however, holds that if the assured representations of material facts as to avoid the policy. There can be
has some affection or ailment of one or more of the organs inquired no dispute that the information given by her in her application for
about so well-defined and marked as to materially derange for a insurance was false, namely, that she had never had cancer or
time the functions of such organ, as in the case of Bright's disease, tumors, or consulted any physician or undergone any operation
the policy will be avoided by a nondisclosure, irrespective of the fact within the preceding period of five years. Are the facts then falsely
whether the assured knew of such ailment or not. . . ." represented material? The Insurance Law (Section 30) provides that
"materiality is to be determined not by the event, but solely by the
In view of the foregoing, we are of the opinion that the appellant's probable and reasonable influence of the facts upon the party to
first two assignments of error are well founded, wherefore, the whom the communication is due, in forming his estimate of the
appealed judgment is reversed and the defendant absolved from the proposed contract, or in making his inquiries." It seems to be the
complaint, with the costs of both instances to the plaintiffs. So contention of appellants that the facts subject of the representation
ordered. 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
G.R. No. L-16163 February 28, 1963 applicant concerning previous condition of health and diseases
suffered, for such information necessarily constitutes an important
IGNACIO SATURNINO, in his own behalf and as the JUDICIAL factor which the insurer takes into consideration in deciding
GUARDIAN OF CARLOS SATURNINO, minor, plaintiffs-appellants, whether to issue the policy or not. It is logical to assume that if
vs. appellee had been properly apprised of the insured's medical history
THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, defendant- she would at least have been made to undergo medical examination
appellee. in order to determine her insurability.

Eleazaro A. Samson for plaintiffs-appellants. Appellants argue that due information concerning the insured's
Abello & Macias for defendant-appellee. previous illness and operation had been given to appellees agent
Edward A. Santos, who filled the application form after it was signed
MAKALINTAL, J.: 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
Plaintiffs, now appellants, filed this action in the Court of First is a finding of fact which is binding upon us, this appeal having been
Instance of Manila to recover the sum of P5,000.00, corresponding taken upon questions of law alone. We do not deem it necessary,
to the face value of an insurance policy issued by defendant on the therefore, to consider appellee's additional argument, which was
life of Estefania A. Saturnino, and the sum of P1,500.00 as attorney's upheld by the trial court, that in signing the application form in blank
fees. Defendant, now appellee, set up special defenses in its answer, and leaving it to Edward A. Santos to fill (assuming that to be the
with a counterclaim for damages allegedly sustained as a result of truth) the insured in effect made Santos her agent for that purpose
the unwarranted presentation of this case. Both the complaint and and consequently was responsible for the errors in the entries made
the counterclaim were dismissed by the trial court; but appellants by him in that capacity.
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 In the application for insurance signed by the insured in this case,
corresponding amount P359.65 was sent to them by appellee. she agreed to submit to a medical examination by a duly appointed
examiner of appellee if in the latter's opinion such examination was
The policy sued upon is one for 20-year endowment non-medical necessary as further evidence of insurability. In not asking her to
insurance. This kind of policy dispenses with the medical submit to a medical examination, appellants maintain, appellee was
examination of the applicant usually required in ordinary life guilty of negligence, which precluded it from finding about her
policies. However, detailed information is called for in the actual state of health. No such negligence can be imputed to
application concerning the applicant's health and medical history. appellee. It was precisely because the insured had given herself a
The written application in this case was submitted by Saturnino to clean bill of health that appellee no longer considered an actual
appellee on November 16, 1957, witnessed by appellee's agent medical checkup necessary.
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, Appellants also contend there was no fraudulent concealment of the
1958 Saturnino died of pneumonia, secondary to influenza. truth inasmuch as the insured herself did not know, since her doctor
Appellants here, who are her surviving husband and minor child, never told her, that the disease for which she had been operated on
respectively, demanded payment of the face value of the policy. The was cancer. In the first place the concealment of the fact of the
claim was rejected and this suit was subsequently instituted. operation itself was fraudulent, as there could not have been any
mistake about it, no matter what the ailment. Secondly, in order to
It appears that two months prior to the issuance of the policy or on avoid a policy it is not necessary to show actual fraud on the part of
September 9, 1957, Saturnino was operated on for cancer, involving the insured. In the case of Kasprzyk v. Metropolitan Insurance Co.,
complete removal of the right breast, including the pectoral muscles 140 N.Y.S. 211, 214, it was held:
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 Moreover, if it were the law that an insurance company could not
according to the surgeon who operated on her she could not be depend a policy on the ground of misrepresentation, unless it could
considered definitely cured, her ailment being of the malignant type. show actual knowledge on the part of the applicant that the
statements were false, then it is plain that it would be impossible for
Notwithstanding the fact of her operation Estefania A. Saturnino did it to protect itself and its honest policyholders against fraudulent
not make a disclosure thereof in her application for insurance. On and improper claims. It would be wholly at the mercy of any one
the contrary, she stated therein that she did not have, nor had she who wished to apply for insurance, as it would be impossible to
ever had, among other ailments listed in the application, cancer or show actual fraud except in the extremest cases. It could not rely on
other tumors; that she had not consulted any physician, undergone an application as containing information on which it could act. There
any operation or suffered any injury within the preceding five years; would be no incentive to an applicant to tell the truth.
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, Wherefore, the parties respectfully pray that the foregoing
ovaries, uterus, and menstrual disorders. The application also recites stipulation of facts be admitted and approved by this Honorable
Court, without prejudice to the parties adducing other evidence to of Reliance Insurance whom he asked to accompany him to the
prove their case not covered by this stipulation of facts. 1wph1.t office of the company so that he can file his claim. He averred that in
support of his claim, he submitted the fire clearance, the insurance
In this jurisdiction a concealment, whether intentional or policies and inventory of stocks. He further testified that the three
unintentional, entitles the insurer to rescind the contract of insurance companies are sister companies, and as a matter of fact
insurance, concealment being defined as "negligence to when he was following-up his claim with Equitable Insurance, the
communicate that which a party knows and ought to communicate" Claims Manager told him to go first to Reliance Insurance and if said
(Sections 24 & 26, Act No. 2427). In the case of Argente v. West company agrees to pay, they would also pay. The same treatment
Coast Life Insurance Co., 51 Phil. 725, 732, this Court said, quoting was given him by the other insurance companies. Ultimately, the
from Joyce, The Law of Insurance, 2nd ed., Vol. 3: three insurance companies denied plaintiffs' claim for payment.

"The basis of the rule vitiating the contract in cases of concealment In its letter of denial dated March 9, 1983, (Exhibit "C" No. 8-84)
is that it misleads or deceives the insurer into accepting the risk, or Western Guaranty Corporation through Claims Manager Bernard S.
accepting it at the rate of premium agreed upon. The insurer, relying Razon told the plaintiff that his claim "is denied for breach of policy
upon the belief that the assured will disclose every material fact conditions." Reliance Insurance purveyed the same message in its
within his actual or presumed knowledge, is misled into a belief that letter dated November 23, 1982 and signed by Executive Vice-
the circumstance withheld does not exist, and he is thereby induced President Mary Dee Co (Exhibit "C" No. 7-84) which said that
to estimate the risk upon a false basis that it does not exist." "plaintiff's claim is denied for breach of policy conditions." The letter
of denial received by the plaintiff from Equitable Insurance
The judgment appealed from, dismissing the complaint and Corporation (Exhibit "C" No. 6-84) was of the same tenor, as said
awarding the return to appellants of the premium already paid, with letter dated February 22, 1983, and signed by Vice-President Elma R.
interest at 6% up to January 29, 1959, affirmed, with costs against Bondad, said "we find that certain policy conditions were violated,
appellants. therefore, we regret, we have to deny your claim, as it is hereby
denied in its entirety."
G.R. No. 94071 March 31, 1992
In relation to the case against Reliance Surety and Insurance
NEW LIFE ENTERPRISES and JULIAN SY, petitioners, Company, a certain Atty. Serafin D. Dator, acting in behalf of the
vs. plaintiff, sent a letter dated February 13, 1983 (Exhibit "G-l" No 7-
HON. COURT OF APPEALS, EQUITABLE INSURANCE CORPORATION, 84) to Executive Vice-President Mary Dee Co asking that he be
RELIANCE SURETY AND INSURANCE CO., INC. and WESTERN informed as to the specific policy conditions allegedly violated by the
GUARANTY CORPORATION, respondents. plaintiff. In her reply-letter dated March 30, 1983, Executive Vice-
President Mary Dee Co informed Atty. Dator that Julian Sy violated
Policy Condition No. "3" which requires the insured to give notice of
REGALADO, J.: any insurance or insurances already effected covering the stocks in
trade. 3
This appeal by certiorari seeks the nullification of the decision 1 of
respondent Court of Appeals in CA-G.R. CV No. 13866 which Because of the denial of their claims for payment by the three (3)
reversed the decision of the Regional Trial Court, Branch LVII at insurance companies, petitioner filed separate civil actions against
Lucena City, jointly deciding Civil Cases Nos. 6-84, 7-84 and 8-84 the former before the Regional Trial Court of Lucena City, which
thereof and consequently ordered the dismissal of the aforesaid cases were consolidated for trial, and thereafter the court below
actions filed by herein petitioners. rendered its decision on December 19, l986 with the following
The undisputed background of this case as found by the court a quo
and adopted by respondent court, being sustained by the evidence WHEREFORE, judgment in the above-entitled cases is rendered in
on record, we hereby reproduce the same with approval. 2 the following manner, viz:

The antecedents of this case show that Julian Sy and Jose Sy Bang 1. In Civil Case No. 6-84, judgment is rendered for the
have formed a business partnership in the City of Lucena. Under the plaintiff New Life Enterprises and against the defendant Equitable
business name of New Life Enterprises, the partnership engaged in Insurance Corporation ordering the latter to pay the former the sum
the sale of construction materials at its place of business, a two of Two Hundred Thousand (P200,000.00) Pesos and considering that
storey building situated at Iyam, Lucena City. The facts show that payment of the claim of the insured has been unreasonably denied,
Julian Sy insured the stocks in trade of New Life Enterprises with pursuant to Sec. 244 of the Insurance Code, defendant is further
Western Guaranty Corporation, Reliance Surety and Insurance. Co., ordered to pay the plaintiff attorney's fees in the amount of Twenty
Inc., and Equitable Insurance Corporation. Thousand (P20,000.00) Pesos. All sums of money to be paid by
virtue hereof shall bear interest at 12% per annum (pursuant to Sec.
On May 15, 1981, Western Guaranty Corporation issued Fire 244 of the Insurance Code) from February 14, 1983, (91st day from
Insurance Policy No. 37201 in the amount of P350,000.00. This November 16, 1982, when Sworn Statement of Fire Claim was
policy was renewed on May, 13, 1982. received from the insured) until they are fully paid;

On July 30,1981, Reliance Surety and Insurance Co., Inc. issued Fire 2. In Civil Case No. 7-84, judgment is rendered for the
Insurance Policy No. 69135 in the amount of P300,000.00 (Renewed plaintiff Julian Sy and against the defendant Reliance Surety and
under Renewal Certificate No. 41997) An additional insurance was Insurance Co., Inc., ordering the latter to pay the former the sum of
issued by the same company on November 12, 1981 under Fire P1,000,000.00 (P300,000.00 under Policy No. 69135 and
Insurance Policy No. 71547 in the amount of P700,000.00. P700,000.00 under Policy No. 71547) and considering that payment
of the claim of the insured has been unreasonably denied, pursuant
On February 8, 1982, Equitable Insurance Corporation issued Fire to Sec. 244 of the Insurance Code, defendant is further ordered to
Insurance Policy No. 39328 in the amount of P200,000.00. pay the plaintiff the amount of P100,000.00 as attorney's fees.

Thus when the building occupied by the New Life Enterprises was All sums of money to be paid by virtue hereof shall bear interest at
gutted by fire at about 2:00 o'clock in the morning of October 19, 12% per annum (pursuant to Sec. 244 of the Insurance Code) from
1982, the stocks in the trade inside said building were insured February 14, 1983, (91st day from November 16, 1982 when Sworn
against fire in the total amount of P1,550,000.00. According to the Statement of Fire Claim was received from the insured) until they
certification issued by the Headquarters, Philippine Constabulary are fully paid;
/Integrated National Police, Camp Crame, the cause of fire was
electrical in nature. According to the plaintiffs, the building and the 3. In Civil Case No. 8-84, judgment is rendered for the
stocks inside were burned. After the fire, Julian Sy went to the agent plaintiff New Life Enterprises and against the defendant Western
Guaranty Corporation ordering the latter to pay the sum of knowledge of the agent is knowledge of the principal, aside from
P350,000.00 to the Consolidated Bank and Trust Corporation, being of dubious applicability here has likewise been roundly refuted
Lucena Branch, Lucena City, as stipulated on the face of Policy No. by respondent court whose factual findings we find acceptable.
37201, and considering that payment of the aforementioned sum of
money has been unreasonably denied, pursuant to Sec. 244 of the Thus, it points out that while petitioner Julian Sy claimed that he had
Insurance Code, defendant is further ordered to pay the plaintiff informed insurance agent Alvarez regarding the co-insurance on the
attorney's fees in the amount of P35,000.00. property, he contradicted himself by inexplicably claiming that he
had not read the terms of the policies; that Yap Dam Chuan could
All sums of money to be paid by virtue hereof shall bear interest at not likewise have obtained such knowledge for the same reason,
12% per annum (pursuant to Sec. 244 of the Insurance Code) from aside from the fact that the insurance with Western was obtained
February 5, 1982, (91st day from 1st week of November 1983 when before those of Reliance and Equitable; and that the conclusion of
insured filed formal claim for full indemnity according to adjuster the trial court that Reliance and Equitable are "sister companies" is
Vetremar Dela Merced) until they are fully paid. 4 an unfounded conjecture drawn from the mere fact that Yap Kam
Chuan was an agent for both companies which also had the same
As aforestated, respondent Court of Appeals reversed said judgment insurance claims adjuster. Availment of the services of the same
of the trial court, hence this petition the crux wherein is whether or agents and adjusters by different companies is a common practice in
not Conditions Nos. 3 and 27 of the insurance contracts were the insurance business and such facts do not warrant the speculative
violated by petitioners thereby resulting in their forfeiture of all the conclusion of the trial court.
benefits thereunder.
Furthermore, when the words and language of documents are clear
Condition No. 3 of said insurance policies, otherwise known as the and plain or readily understandable by an ordinary reader thereof,
"Other Insurance Clause," is uniformly contained in all the there is absolutely no room for interpretation or construction
aforestated insurance contracts of herein petitioners, as follows: anymore.9 Courts are not allowed to make contracts for the parties;
rather, they will intervene only when the terms of the policy are
3. The insured shall give notice to the Company of any ambiguous, equivocal, or uncertain. 10 The parties must abide by
insurance or insurances already effected, or which may the terms of the contract because such terms constitute the
subsequently be effected, covering any of the property or properties measure of the insurer's liability and compliance therewith is a
consisting of stocks in trade, goods in process and/or inventories condition precedent to the insured's right of recovery from the
only hereby insured, and unless such notice be given and the insurer. 11
particulars of such insurance or insurances be stated therein or
endorsed on this policy pursuant to Section 50 of the Insurance While it is a cardinal principle of insurance law that a policy or
Code, by or on behalf of the Company before the occurrence of any contract of insurance is to be construed liberally in favor of the
loss or damage, all benefits under this policy shall be deemed insured and strictly against the insurer company, yet contracts of
forfeited, provided however, that this condition shall not apply insurance, like other contracts, are to be construed according to the
when the total insurance or insurances in force at the time of loss or sense and meaning of the terms which the parties themselves have
damage not more than P200,000.00. 5 used. If such terms are clear and unambiguous, they must be taken
and understood in their plain, ordinary and popular sense. 12
Petitioners admit that the respective insurance policies issued by Moreover, obligations arising from contracts have the force of law
private respondents did not state or endorse thereon the other between the contracting parties and should be complied with in
insurance coverage obtained or subsequently effected on the same good faith. 13
stocks in trade for the loss of which compensation is claimed by
petitioners. 6 The policy issued by respondent Western Guaranty Petitioners should be aware of the fact that a party is not relieved of
Corporation (Western) did not declare respondent Reliance Surety the duty to exercise the ordinary care and prudence that would be
and Insurance Co., Inc. (Reliance) and respondent Equitable exacted in relation to other contracts. The conformity of the insured
Insurance Corporation (Equitable) as co-insurers on the same stocks, to the terms of the policy is implied from his failure to express any
while Reliance's Policies covering the same stocks did not likewise disagreement with what is provided for.14 It may be true that the
declare Western and Equitable as such co-insurers. It is further majority rule, as cited by petitioners, is that injured persons may
admitted by petitioners that Equitable's policy stated "nil" in the accept policies without reading them, and that this is not negligence
space thereon requiring indication of any co-insurance although per se. 15 But, this is not without any exception. It is and was
there were three (3) policies subsisting on the same stocks in trade incumbent upon petitioner Sy to read the insurance contracts, and
at the time of the loss, namely, that of Western in the amount of this can be reasonably expected of him considering that he has been
P350,000.00 and two (2) policies of Reliance in the total amount of a businessman since 196516 and the contract concerns indemnity in
P1,000,000.00. 7 case of loss in his money-making trade of which important
consideration he could not have been unaware as it was pre-in case
In other words, the coverage by other insurance or co-insurance of loss in his money-making trade of which important consideration
effected or subsequently arranged by petitioners were neither he could not have been unaware as it was precisely the reason for
stated nor endorsed in the policies of the three (3) private his procuring the same.
respondents, warranting forfeiture of all benefits thereunder if we
are to follow the express stipulation in the aforequoted Policy We reiterate our pronouncement in Pioneer Insurance and Surety
Condition No. 3. Corporation vs. Yap: 17

Petitioners contend that they are not to be blamed for the . . . And considering the terms of the policy which required the
omissions, alleging that insurance agent Leon Alvarez (for Western) insured to declare other insurances, the statement in question must
and Yap Kam Chuan (for Reliance and Equitable) knew about the be deemed to be a statement (warranty) binding on both insurer
existence of the additional insurance coverage and that they were and insured, that there were no other insurance on the property. . . .
not informed about the requirement that such other or additional
insurance should be stated in the policy, as they have not even read The annotation then, must be deemed to be a warranty that the
policies.8 These contentions cannot pass judicial muster. property was not insured by any other policy. Violation thereof
entitled the insurer to rescind (Sec. 69, Insurance Act). Such
The terms of the contract are clear and unambiguous. The insured is misrepresentation is fatal in the light of our views in Santa Ana vs.
specifically required to disclose to the insurer any other insurance Commercial Union Assurance Company, Ltd., 55 Phil. 329. The
and its particulars which he may have effected on the same subject materiality of non-disclosure of other insurance policies is not open
matter. The knowledge of such insurance by the insurer's agents, to doubt.
even assuming the acquisition thereof by the former, is not the
"notice" that would estop the insurers from denying the claim. xxx xxx xxx
Besides, the so-called theory of imputed knowledge, that is,
The obvious purpose of the aforesaid requirement in the policy is to court has been barred by reason of the time constraint provided in
prevent over-insurance and thus avert the perpetration of fraud. the insurance contract. It is evident that after the plaintiff had
The public, as well as the insurer, is interested in preventing the received the letter of denial, he still found it necessary to be
situation in which a fire would be profitable to the insured. informed of the specific causes or reasons for the denial of his claim,
According to Justice Story: "The insured has no right to complain, for reason for which his lawyer, Atty. Dator deemed it wise to send a
he assents to comply with all the stipulations on his side, in order to letter of inquiry to the defendant which was answered by
entitle himself to the benefit of the contract, which, upon reason or defendant's Executive Vice-President in a letter dated March 30,
principle, he has no right to ask the court to dispense with the 1983, . . . . Assuming, gratuitously, that the letter of Executive Vice-
performance of his own part of the agreement, and yet to bind the President Mary Dee Co dated March 30, 1983, was received by
other party to obligations, which, but for those stipulations, would plaintiff on the same date, the period of limitation should start to
not have been entered into." run only from said date in the spirit of fair play and equity. . . . 21

Subsequently, in the case of Pacific Banking Corporation vs. Court of We have perforce to reject this theory of the court below for being
Appeals, et al., 18 we held: contrary to what we have heretofore declared:

It is not disputed that the insured failed to reveal before the loss It is important to note the principle laid down by this Court in the
three other insurances. As found by the Court of Appeals, by reason case of Ang vs. Fulton Fire Insurance Co. (2 SCRA 945 [1961]) to wit:
of said unrevealed insurances, the insured had been guilty of a false
declaration; a clear misrepresentation and a vital one because The condition contained in an insurance policy that claims must be
where the insured had been asked to reveal but did not, that was presented within one year after rejection is not merely a procedural
deception. Otherwise stated, had the insurer known that there were requirement but an important matter essential to a prompt
many co-insurances, it could have hesitated or plainly desisted from settlement of claims against insurance companies as it demands that
entering into such contract. Hence, the insured was guilty of clear insurance suits be brought by the insured while the evidence as to
fraud (Rollo, p. 25). the origin and cause of destruction have not yet disappeared.

Petitioner's contention that the allegation of fraud is but a mere In enunciating the above-cited principle, this Court had definitely
inference or suspicion is untenable. In fact, concrete evidence of settled the rationale for the necessity of bringing suits against the
fraud or false declaration by the insured was furnished by the Insurer within one year from the rejection of the claim. The
petitioner itself when the facts alleged in the policy under clauses contention of the respondents that the one-year prescriptive period
"Co-Insurances Declared" and "Other Insurance Clause" are does not start to run until the petition for reconsideration had been
materially different from the actual number of co-insurances taken resolved by the insurer, runs counter to the declared purpose for
over the subject property. Consequently, "the whole foundation of requiring that an action or suit be filed in the Insurance Commission
the contract fails, the risk does not attach and the policy never or in a court of competent jurisdiction from the denial of the claim.
becomes a contract between the parties." Representations of facts To uphold respondents' contention would contradict and defeat the
are the foundation of the contract and if the foundation does not very principle which this Court had laid down. Moreover, it can
exist, the superstructure does not arise. Falsehood in such easily be used by insured persons as a scheme or device to waste
representations is not shown to vary or add to the contract, or to time until any evidence which may be considered against them is
terminate a contract which has once been made, but to show that destroyed.
no contract has ever existed (Tolentino, Commercial Laws of the
Philippines, p. 991, Vol. II, 8th Ed.,) A void or inexistent contract is xxx xxx xxx
one which has no force and effect from the very beginning, as if it
had never been entered into, and which cannot be validated either While in the Eagle Star case (96 Phil. 701), this Court uses the phrase
by time or by ratification (Tongoy vs. C.A., 123 SCRA 99 (1983); Avila "final rejection", the same cannot be taken to mean the rejection of
v. C.A., 145 SCRA, 1986). a petition for reconsideration as insisted by respondents. Such was
clearly not the meaning contemplated by this Court. The insurance
As the insurance policy against fire expressly required that notice policy in said case provides that the insured should file his claim first,
should be given by the insured of other insurance upon the same with the carrier and then with the insurer. The "final rejection" being
property, the total absence of such notice nullifies the policy. referred to in said case is the rejection by the insurance company. 22

To further warrant and justify the forfeiture of the benefits under Furthermore, assuming arguendo that petitioners felt the legitimate
the insurance contracts involved, we need merely to turn to Policy need to be clarified as to the policy condition violated, there was a
Condition No. 15 thereof, which reads in part: considerable lapse of time from their receipt of the insurer's
clarificatory letter dated March 30, 1983, up to the time the
15. . . . if any false declaration be made or used in support complaint was filed in court on January 31, 1984. The one-year
thereof, . . . all benefits under this Policy shall be forfeited . . . . 19 prescriptive period was yet to expire on November 29, 1983, or
about eight (8) months from the receipt of the clarificatory letter,
Additionally, insofar as the liability of respondent Reliance is but petitioners let the period lapse without bringing their action in
concerned, it is not denied that the complaint for recovery was filed court. We accordingly find no "peculiar circumstances" sufficient to
in court by petitioners only on January 31, 1984, or after more than relax the enforcement of the one-year prescriptive period and we,
one (1) year had elapsed from petitioners' receipt of the insurers' therefore, hold that petitioners' claim was definitely filed out of
letter of denial on November 29, 1982. Policy Condition No. 27 of time.
their insurance contract with Reliance provides:
WHEREFORE, finding no cogent reason to disturb the judgment of
27. Action or suit clause. If a claim be made and rejected respondent Court of Appeals, the same is hereby AFFIRMED.
and an action or suit be not commenced either in the Insurance
Commission or any court of competent jurisdiction of notice of such SO ORDERED.
rejection, or in case of arbitration taking place as provided herein,
within twelve (12) months after due notice of the award made by
the arbitrator or arbitrators or umpire, then the claim shall for all G.R. No. 186983 February 22, 2012
purposes be deemed to have been abandoned and shall not
thereafter be recoverable hereunder. 20 MA. LOURDES S. FLORENDO, Petitioner,
On this point, the trial court ruled: PHILAM PLANS, INC., PERLA ABCEDE MA. CELESTE ABCEDE,
. . . However, because of the peculiar circumstances of this case, we
hesitate in concluding that plaintiff's right to ventilate his claim in DECISION
ABAD, J.: 2. Whether or not the CA erred in holding that Manuel was bound
by the failure of respondents Perla and Ma. Celeste to declare the
This case is about an insureds alleged concealment in his pension condition of Manuels health in the pension plan application; and
plan application of his true state of health and its effect on the life
insurance portion of that plan in case of death. 3. Whether or not the CA erred in finding that Philam Plans
approval of Manuels pension plan application and acceptance of his
The Facts and the Case premium payments precluded it from denying Lourdes claim.

On October 23, 1997 Manuel Florendo filed an application for Rulings of the Court
comprehensive pension plan with respondent Philam Plans, Inc.
(Philam Plans) after some convincing by respondent Perla Abcede. One. Lourdes points out that, seeing the unfilled spaces in Manuels
The plan had a pre-need price of 997,050.00, payable in 10 years, pension plan application relating to his medical history, Philam Plans
and had a maturity value of 2,890,000.00 after 20 years.1 Manuel should have returned it to him for completion. Since Philam Plans
signed the application and left to Perla the task of supplying the chose to approve the application just as it was, it cannot cry
information needed in the application.2 Respondent Ma. Celeste concealment on Manuels part. Further, Lourdes adds that Philam
Abcede, Perlas daughter, signed the application as sales counselor.3 Plans never queried Manuel directly regarding the state of his
health. Consequently, it could not blame him for not mentioning
Aside from pension benefits, the comprehensive pension plan also it.19
provided life insurance coverage to Florendo.4 This was covered by
a Group Master Policy that Philippine American Life Insurance But Lourdes is shifting to Philam Plans the burden of putting on the
Company (Philam Life) issued to Philam Plans.5 Under the master pension plan application the true state of Manuels health. She
policy, Philam Life was to automatically provide life insurance forgets that since Philam Plans waived medical examination for
coverage, including accidental death, to all who signed up for Philam Manuel, it had to rely largely on his stating the truth regarding his
Plans comprehensive pension plan.6 If the plan holder died before health in his application. For, after all, he knew more than anyone
the maturity of the plan, his beneficiary was to instead receive the that he had been under treatment for heart condition and diabetes
proceeds of the life insurance, equivalent to the pre-need price. for more than five years preceding his submission of that
Further, the life insurance was to take care of any unpaid premium application. But he kept those crucial facts from Philam Plans.
until the pension plan matured, entitling the beneficiary to the
maturity value of the pension plan.7 Besides, when Manuel signed the pension plan application, he
adopted as his own the written representations and declarations
On October 30, 1997 Philam Plans issued Pension Plan Agreement embodied in it. It is clear from these representations that he
PP430055848 to Manuel, with petitioner Ma. Lourdes S. Florendo, concealed his chronic heart ailment and diabetes from Philam Plans.
his wife, as beneficiary. In time, Manuel paid his quarterly The pertinent portion of his representations and declarations read
premiums.9 as follows:

Eleven months later or on September 15, 1998, Manuel died of I hereby represent and declare to the best of my knowledge that:
blood poisoning. Subsequently, Lourdes filed a claim with Philam
Plans for the payment of the benefits under her husbands plan.10 xxxx
Because Manuel died before his pension plan matured and his wife
was to get only the benefits of his life insurance, Philam Plans (c) I have never been treated for heart condition, high blood
forwarded her claim to Philam Life.11 pressure, cancer, diabetes, lung, kidney or stomach disorder or any
other physical impairment in the last five years.
On May 3, 1999 Philam Plans wrote Lourdes a letter,12 declining her
claim. Philam Life found that Manuel was on maintenance medicine (d) I am in good health and physical condition.
for his heart and had an implanted pacemaker. Further, he suffered
from diabetes mellitus and was taking insulin. Lourdes renewed her If your answer to any of the statements above reveal otherwise,
demand for payment under the plan13 but Philam Plans rejected please give details in the space provided for:
it,14 prompting her to file the present action against the pension
plan company before the Regional Trial Court (RTC) of Quezon Date of confinement : ____________________________
Name of Hospital or Clinic : ____________________________
On March 30, 2006 the RTC rendered judgment,16 ordering Philam
Plans, Perla and Ma. Celeste, solidarily, to pay Lourdes all the Name of Attending Physician : ____________________________
benefits from her husbands pension plan, namely: 997,050.00, the
proceeds of his term insurance, and 2,890,000.00 lump sum Findings : ____________________________
pension benefit upon maturity of his plan; 100,000.00 as moral
damages; and to pay the costs of the suit. The RTC ruled that Others: (Please specify) : ____________________________
Manuel was not guilty of concealing the state of his health from his
pension plan application. x x x x.20 (Emphasis supplied)

On December 18, 2007 the Court of Appeals (CA) reversed the RTC Since Manuel signed the application without filling in the details
decision,17 holding that insurance policies are traditionally contracts regarding his continuing treatments for heart condition and
uberrimae fidae or contracts of utmost good faith. As such, it diabetes, the assumption is that he has never been treated for the
required Manuel to disclose to Philam Plans conditions affecting the said illnesses in the last five years preceding his application. This is
risk of which he was aware or material facts that he knew or ought implicit from the phrase "If your answer to any of the statements
to know.18 above (specifically, the statement: I have never been treated for
heart condition or diabetes) reveal otherwise, please give details in
Issues Presented the space provided for." But this is untrue since he had been on
"Coumadin," a treatment for venous thrombosis,21 and insulin, a
The issues presented in this case are: drug used in the treatment of diabetes mellitus, at that time.22

1. Whether or not the CA erred in finding Manuel guilty of Lourdes insists that Manuel had concealed nothing since Perla, the
concealing his illness when he kept blank and did not answer soliciting agent, knew that Manuel had a pacemaker implanted on
questions in his pension plan application regarding the ailments he his chest in the 70s or about 20 years before he signed up for the
suffered from; pension plan.23 But by its tenor, the responsibility for preparing the
application belonged to Manuel. Nothing in it implies that someone It may be true that x x x insured persons may accept policies without
else may provide the information that Philam Plans needed. Manuel reading them, and that this is not negligence per se. But, this is not
cannot sign the application and disown the responsibility for having without any exception. It is and was incumbent upon petitioner Sy
it filled up. If he furnished Perla the needed information and to read the insurance contracts, and this can be reasonably expected
delegated to her the filling up of the application, then she acted on of him considering that he has been a businessman since 1965 and
his instruction, not on Philam Plans instruction. the contract concerns indemnity in case of loss in his money-making
trade of which important consideration he could not have been
Lourdes next points out that it made no difference if Manuel failed unaware as it was precisely the reason for his procuring the same.32
to reveal the fact that he had a pacemaker implant in the early 70s
since this did not fall within the five-year timeframe that the The same may be said of Manuel, a civil engineer and manager of a
disclosure contemplated.24 But a pacemaker is an electronic device construction company.33 He could be expected to know that one
implanted into the body and connected to the wall of the heart, must read every document, especially if it creates rights and
designed to provide regular, mild, electric shock that stimulates the obligations affecting him, before signing the same. Manuel is not
contraction of the heart muscles and restores normalcy to the unschooled that the Court must come to his succor. It could
heartbeat.25 That Manuel still had his pacemaker when he applied reasonably be expected that he would not trifle with something that
for a pension plan in October 1997 is an admission that he remained would provide additional financial security to him and to his wife in
under treatment for irregular heartbeat within five years preceding his twilight years.
that application.
Three. In a final attempt to defend her claim for benefits under
Besides, as already stated, Manuel had been taking medicine for his Manuels pension plan, Lourdes points out that any defect or
heart condition and diabetes when he submitted his pension plan insufficiency in the information provided by his pension plan
application. These clearly fell within the five-year period. More, even application should be deemed waived after the same has been
if Perlas knowledge of Manuels pacemaker may be applied to approved, the policy has been issued, and the premiums have been
Philam Plans under the theory of imputed knowledge,26 it is not collected. 34
claimed that Perla was aware of his two other afflictions that
needed medical treatments. Pursuant to Section 2727 of the The Court cannot agree. The comprehensive pension plan that
Insurance Code, Manuels concealment entitles Philam Plans to Philam Plans issued contains a one-year incontestability period. It
rescind its contract of insurance with him. states:

Two. Lourdes contends that the mere fact that Manuel signed the VIII. INCONTESTABILITY
application in blank and let Perla fill in the required details did not
make her his agent and bind him to her concealment of his true After this Agreement has remained in force for one (1) year, we can
state of health. Since there is no evidence of collusion between no longer contest for health reasons any claim for insurance under
them, Perlas fault must be considered solely her own and cannot this Agreement, except for the reason that installment has not been
prejudice Manuel.28 paid (lapsed), or that you are not insurable at the time you bought
this pension program by reason of age. If this Agreement lapses but
But Manuel forgot that in signing the pension plan application, he is reinstated afterwards, the one (1) year contestability period shall
certified that he wrote all the information stated in it or had start again on the date of approval of your request for
someone do it under his direction. Thus: reinstatement.35 1wphi1

APPLICATION FOR PENSION PLAN The above incontestability clause precludes the insurer from
(Comprehensive) disowning liability under the policy it issued on the ground of
concealment or misrepresentation regarding the health of the
I hereby apply to purchase from PHILAM PLANS, INC. a Pension Plan insured after a year of its issuance.
Program described herein in accordance with the General Provisions
set forth in this application and hereby certify that the date and Since Manuel died on the eleventh month following the issuance of
other information stated herein are written by me or under my his plan,36 the one year incontestability period has not yet set in.
direction. x x x.29 (Emphasis supplied) Consequently, Philam Plans was not barred from questioning
Lourdes entitlement to the benefits of her husbands pension plan.
Assuming that it was Perla who filled up the application form,
Manuel is still bound by what it contains since he certified that he WHEREFORE, the Court AFFIRMS in its entirety the decision of the
authorized her action. Philam Plans had every right to act on the Court of Appeals in CA-G.R. CV 87085 dated December 18, 2007.
faith of that certification.
Lourdes could not seek comfort from her claim that Perla had
assured Manuel that the state of his health would not hinder the G.R. No. 125678 March 18, 2002
approval of his application and that what is written on his
application made no difference to the insurance company. But, PHILAMCARE HEALTH SYSTEMS, INC., petitioner,
indubitably, Manuel was made aware when he signed the pension vs.
plan application that, in granting the same, Philam Plans and Philam COURT OF APPEALS and JULITA TRINOS, respondents.
Life were acting on the truth of the representations contained in
that application. Thus: YNARES-SANTIAGO, J.:

DECLARATIONS AND REPRESENTATIONS Ernani Trinos, deceased husband of respondent Julita Trinos, applied
for a health care coverage with petitioner Philamcare Health
xxxx Systems, Inc. In the standard application form, he answered no to
the following question:
I agree that the insurance coverage of this application is based on
the truth of the foregoing representations and is subject to the Have you or any of your family members ever consulted or been
provisions of the Group Life Insurance Policy issued by THE treated for high blood pressure, heart trouble, diabetes, cancer, liver
PHILIPPINE AMERICAN LIFE INSURANCE CO. to PHILAM PLANS, disease, asthma or peptic ulcer? (If Yes, give details).1
INC.30 (Emphasis supplied)
The application was approved for a period of one year from March
As the Court said in New Life Enterprises v. Court of Appeals:31 1, 1988 to March 1, 1989. Accordingly, he was issued Health Care
Agreement No. P010194. Under the agreement, respondents
husband was entitled to avail of hospitalization benefits, whether
ordinary or emergency, listed therein. He was also entitled to avail
of "out-patient benefits" such as annual physical examinations, Section 2 (1) of the Insurance Code defines a contract of insurance
preventive health care and other out-patient services. as an agreement whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an
Upon the termination of the agreement, the same was extended for unknown or contingent event. An insurance contract exists where
another year from March 1, 1989 to March 1, 1990, then from the following elements concur:
March 1, 1990 to June 1, 1990. The amount of coverage was
increased to a maximum sum of P75,000.00 per disability.2 1. The insured has an insurable interest;

During the period of his coverage, Ernani suffered a heart attack and 2. The insured is subject to a risk of loss by the happening of the
was confined at the Manila Medical Center (MMC) for one month designated peril;
beginning March 9, 1990. While her husband was in the hospital,
respondent tried to claim the benefits under the health care 3. The insurer assumes the risk;
agreement. However, petitioner denied her claim saying that the
Health Care Agreement was void. According to petitioner, there was 4. Such assumption of risk is part of a general scheme to distribute
a concealment regarding Ernanis medical history. Doctors at the actual losses among a large group of persons bearing a similar risk;
MMC allegedly discovered at the time of Ernanis confinement that and
he was hypertensive, diabetic and asthmatic, contrary to his answer
in the application form. Thus, respondent paid the hospitalization 5. In consideration of the insurers promise, the insured pays a
expenses herself, amounting to about P76,000.00. premium.8

After her husband was discharged from the MMC, he was attended Section 3 of the Insurance Code states that any contingent or
by a physical therapist at home. Later, he was admitted at the unknown event, whether past or future, which may damnify a
Chinese General Hospital. Due to financial difficulties, however, person having an insurable interest against him, may be insured
respondent brought her husband home again. In the morning of against. Every person has an insurable interest in the life and health
April 13, 1990, Ernani had fever and was feeling very weak. of himself. Section 10 provides:
Respondent was constrained to bring him back to the Chinese
General Hospital where he died on the same day. Every person has an insurable interest in the life and health:

On July 24, 1990, respondent instituted with the Regional Trial Court (1) of himself, of his spouse and of his children;
of Manila, Branch 44, an action for damages against petitioner and
its president, Dr. Benito Reverente, which was docketed as Civil Case (2) of any person on whom he depends wholly or in part for
No. 90-53795. She asked for reimbursement of her expenses plus education or support, or in whom he has a pecuniary interest;
moral damages and attorneys fees. After trial, the lower court ruled
against petitioners, viz: (3) of any person under a legal obligation to him for the payment of
money, respecting property or service, of which death or illness
WHEREFORE, in view of the forgoing, the Court renders judgment in might delay or prevent the performance; and
favor of the plaintiff Julita Trinos, ordering:
(4) of any person upon whose life any estate or interest vested in
1. Defendants to pay and reimburse the medical and hospital him depends.
coverage of the late Ernani Trinos in the amount of P76,000.00 plus
interest, until the amount is fully paid to plaintiff who paid the same; In the case at bar, the insurable interest of respondents husband in
obtaining the health care agreement was his own health. The health
2. Defendants to pay the reduced amount of moral damages of care agreement was in the nature of non-life insurance, which is
P10,000.00 to plaintiff; primarily a contract of indemnity.9 Once the member incurs
hospital, medical or any other expense arising from sickness, injury
3. Defendants to pay the reduced amount of P10,000.00 as or other stipulated contingent, the health care provider must pay for
exemplary damages to plaintiff; the same to the extent agreed upon under the contract.

4. Defendants to pay attorneys fees of P20,000.00, plus costs of Petitioner argues that respondents husband concealed a material
suit. fact in his application. It appears that in the application for health
coverage, petitioners required respondents husband to sign an
SO ORDERED.3 express authorization for any person, organization or entity that has
any record or knowledge of his health to furnish any and all
On appeal, the Court of Appeals affirmed the decision of the trial information relative to any hospitalization, consultation, treatment
court but deleted all awards for damages and absolved petitioner or any other medical advice or examination.10 Specifically, the
Reverente.4 Petitioners motion for reconsideration was denied.5 Health Care Agreement signed by respondents husband states:
Hence, petitioner brought the instant petition for review, raising the
primary argument that a health care agreement is not an insurance We hereby declare and agree that all statement and answers
contract; hence the "incontestability clause" under the Insurance contained herein and in any addendum annexed to this application
Code6 does not apply.1wphi1.nt are full, complete and true and bind all parties in interest under the
Agreement herein applied for, that there shall be no contract of
Petitioner argues that the agreement grants "living benefits," such health care coverage unless and until an Agreement is issued on this
as medical check-ups and hospitalization which a member may application and the full Membership Fee according to the mode of
immediately enjoy so long as he is alive upon effectivity of the payment applied for is actually paid during the lifetime and good
agreement until its expiration one-year thereafter. Petitioner also health of proposed Members; that no information acquired by any
points out that only medical and hospitalization benefits are given Representative of PhilamCare shall be binding upon PhilamCare
under the agreement without any indemnification, unlike in an unless set out in writing in the application; that any physician is, by
insurance contract where the insured is indemnified for his loss. these presents, expressly authorized to disclose or give testimony at
Moreover, since Health Care Agreements are only for a period of anytime relative to any information acquired by him in his
one year, as compared to insurance contracts which last longer,7 professional capacity upon any question affecting the eligibility for
petitioner argues that the incontestability clause does not apply, as health care coverage of the Proposed Members and that the
the same requires an effectivity period of at least two years. acceptance of any Agreement issued on this application shall be a
Petitioner further argues that it is not an insurance company, which ratification of any correction in or addition to this application as
is governed by the Insurance Commission, but a Health Maintenance stated in the space for Home Office Endorsement.11 (Underscoring
Organization under the authority of the Department of Health. ours)
3. Must be in writing, mailed or delivered to the insured at the
In addition to the above condition, petitioner additionally required address shown in the policy;
the applicant for authorization to inquire about the applicants
medical history, thus: 4. Must state the grounds relied upon provided in Section 64 of the
Insurance Code and upon request of insured, to furnish facts on
I hereby authorize any person, organization, or entity that has any which cancellation is based.18
record or knowledge of my health and/or that of __________ to give
to the PhilamCare Health Systems, Inc. any and all information None of the above pre-conditions was fulfilled in this case. When
relative to any hospitalization, consultation, treatment or any other the terms of insurance contract contain limitations on liability,
medical advice or examination. This authorization is in connection courts should construe them in such a way as to preclude the insurer
with the application for health care coverage only. A photographic from non-compliance with his obligation.19 Being a contract of
copy of this authorization shall be as valid as the original.12 adhesion, the terms of an insurance contract are to be construed
(Underscoring ours) strictly against the party which prepared the contract the
insurer.20 By reason of the exclusive control of the insurance
Petitioner cannot rely on the stipulation regarding "Invalidation of company over the terms and phraseology of the insurance contract,
agreement" which reads: ambiguity must be strictly interpreted against the insurer and
liberally in favor of the insured, especially to avoid forfeiture.21 This
Failure to disclose or misrepresentation of any material information is equally applicable to Health Care Agreements. The phraseology
by the member in the application or medical examination, whether used in medical or hospital service contracts, such as the one at bar,
intentional or unintentional, shall automatically invalidate the must be liberally construed in favor of the subscriber, and if doubtful
Agreement from the very beginning and liability of Philamcare shall or reasonably susceptible of two interpretations the construction
be limited to return of all Membership Fees paid. An undisclosed or conferring coverage is to be adopted, and exclusionary clauses of
misrepresented information is deemed material if its revelation doubtful import should be strictly construed against the provider.22
would have resulted in the declination of the applicant by
Philamcare or the assessment of a higher Membership Fee for the Anent the incontestability of the membership of respondents
benefit or benefits applied for.13 husband, we quote with approval the following findings of the trial
The answer assailed by petitioner was in response to the question
relating to the medical history of the applicant. This largely depends (U)nder the title Claim procedures of expenses, the defendant
on opinion rather than fact, especially coming from respondents Philamcare Health Systems Inc. had twelve months from the date of
husband who was not a medical doctor. Where matters of opinion issuance of the Agreement within which to contest the membership
or judgment are called for, answers made in good faith and without of the patient if he had previous ailment of asthma, and six months
intent to deceive will not avoid a policy even though they are from the issuance of the agreement if the patient was sick of
untrue.14 Thus, diabetes or hypertension. The periods having expired, the defense of
concealment or misrepresentation no longer lie.23
(A)lthough false, a representation of the expectation, intention,
belief, opinion, or judgment of the insured will not avoid the policy if Finally, petitioner alleges that respondent was not the legal wife of
there is no actual fraud in inducing the acceptance of the risk, or its the deceased member considering that at the time of their marriage,
acceptance at a lower rate of premium, and this is likewise the rule the deceased was previously married to another woman who was
although the statement is material to the risk, if the statement is still alive. The health care agreement is in the nature of a contract of
obviously of the foregoing character, since in such case the insurer is indemnity. Hence, payment should be made to the party who
not justified in relying upon such statement, but is obligated to make incurred the expenses. It is not controverted that respondent paid
further inquiry. There is a clear distinction between such a case and all the hospital and medical expenses. She is therefore entitled to
one in which the insured is fraudulently and intentionally states to reimbursement. The records adequately prove the expenses
be true, as a matter of expectation or belief, that which he then incurred by respondent for the deceaseds hospitalization,
knows, to be actually untrue, or the impossibility of which is shown medication and the professional fees of the attending physicians.24
by the facts within his knowledge, since in such case the intent to
deceive the insurer is obvious and amounts to actual fraud.15 WHEREFORE, in view of the foregoing, the petition is DENIED. The
(Underscoring ours) assailed decision of the Court of Appeals dated December 14, 1995
The fraudulent intent on the part of the insured must be established G.R. No. 204736, November 28, 2016
to warrant rescission of the insurance contract.16 Concealment as a
defense for the health care provider or insurer to avoid liability is an MANULIFE PHILIPPINES, INC.,1 Petitioners, v. HERMENEGILDA
affirmative defense and the duty to establish such defense by YBAEZ, Respondent.
satisfactory and convincing evidence rests upon the provider or
insurer. In any case, with or without the authority to investigate, DECISION
petitioner is liable for claims made under the contract. Having
assumed a responsibility under the agreement, petitioner is bound DEL CASTILLO, J.:
to answer the same to the extent agreed upon. In the end, the
liability of the health care provider attaches once the member is Assailed in this Petition for Review on Certiorari2 are the April 26,
hospitalized for the disease or injury covered by the agreement or 2012 Decision3 of the Court of Appeals (CA) in CA-G.R. CV No. 95561
whenever he avails of the covered benefits which he has prepaid. and its December 10, 2012 Resolution4 which affirmed the April 22,
2008 Decision5 and the June 15, 2009 Order6 of the Regional Trial
Under Section 27 of the Insurance Code, "a concealment entitles the Court (RTC), Branch 57, Makati City in Civil Case No. 04-1119.
injured party to rescind a contract of insurance." The right to rescind
should be exercised previous to the commencement of an action on Factual Antecedents
the contract.17 In this case, no rescission was made. Besides, the
cancellation of health care agreements as in insurance policies Before the RTC of Makati City, Manulife Philippines, Inc. (Manulife)
require the concurrence of the following conditions: instituted a Complaint7 for Rescission of Insurance Contracts against
Hermenegilda Ybaez (Hermenegilda) and the BPI Family Savings
1. Prior notice of cancellation to insured; Bank (BPI Family). This was docketed as Civil Case No. 04-1119.

2. Notice must be based on the occurrence after effective date of It is alleged in the Complaint that Insurance Policy Nos. 6066517-18
the policy of one or more of the grounds mentioned; and 6300532-69 (subject insurance policies) which Manulife issued
on October 25, 2002 and on July 25, 2003, respectively, both in favor
of Dr. Gumersindo Solidum Ybaez (insured), were void due to
concealment or misrepresentation of material facts in the latter's advance all the boxes in Annex "C," [that the insured himself was
applications for life insurance, particularly the forms entitled Non- required to answer or check].
Medical Evidence dated August 28, 2002 (NME),10 Medical Evidence
Exam dated September 10, 2002 (MEE),11 and the Declaration of xxxx
Insurability in the Application for Life Insurance (DOI) dated July 9,
2003;12 that Hermenegilda, wife of the said insured, was revocably 10. The four grounds for denial as enumerated in Annex "N" of the
designated as beneficiary in the subject insurance policies; that on complaint are refuted as follows:
November 17, 2003, when one of the subject insurance policies had 1) [The insured's] hospital confinement on 27 December 2000 at
been in force for only one year and three months, while the other [the CDH was] due to right parotid swelling secondary to tumor [for
for only four months, the insured died; that on December 10, 2003, which he] underwent Parotidectomy on 28 December 2000. (There
Hermenegilda, now widow to the said insured, filed a Claimant's is an obvious scar and disfigurement in the right side of [the
Statement-Death Claim13 with respect to the subject insurance insured's] face, in front, and below his ear. This [ought to] have been
policies; that the Death Certificate dated November 17, 200314 easily noticed by [Manulife's company] physician, Dr. [Winifredo]
stated that the insured had "Hepatocellular CA., Crd Stage 4, Lumapas.
secondary to Uric Acid Nephropathy; SAM Nephropathy recurrent
malignant pleural effusion; NASCVC"; that Manulife conducted an 2) [The insured's] history of Hypertension [has been] noted 03 years
investigation into the circumstances leading to the said insured's prior to [the insured's] admission on 27 December 2000. (This is not
death, in view of the aforementioned entries in the said insured's something serious or fatal)
Death Certificate; that Manulife thereafter concluded that the
insured misrepresented or concealed material facts at the time the 3) [The insured's] history of Leptospirosis in 2000. (This is not
subject insurance policies were applied for; and that for this reason confirmed)
Manulife accordingly denied Hermenegilda's death claims and
refunded the premiums that the insured paid on the subject 4) [The insured's] hospital confinement [at the CDH] on 09 May 2002
insurance policies.15 with findings of Agute Pancreatitis (This is related to the gallstones
of [the insured]. When the gallbladder is diseased, distention is
Manulife also set forth in said Complaint the details of the insured's impossible and its pressure regulating function is lost - a fact that
supposed misrepresentation/s or concealment/s, to wit: may explain high incidence of pancreatitis in patient with cholecystic
disease. [The insured] had cholecystitis, so his acute pancreatitis is
2.6. On the basis of the authority granted by [Hermenegilda] in her related to the cholecystitis and chol[e]lithiasis (gallstones).
Claimant's Statement (Annex "H"), [Manulife] conducted an
investigation [into] the Insured's medical records and history, and xxxx
discovered that the Insured concealed material facts which the law, 11. [Manulife] accepted [the insured's] application, and now that a
good faith, and fair dealing required him to reveal when he claim for the benefits [is] made, [Manulife now] says that [the
answered the [NME] (Annex "C"), [the MEE] (Annex "D"), and [the insured] misrepresented and concealed his past illnesses[!] In the
DOI] (Annex "E"), as follows: form filled up by [Dr. Winifredo F. Lumapas,] Manulife's [company]
(1) Insured's confinement at the Cebu Doctors' Hospital [CDH] from physician, dated 9/10/02, [the insured] checked the column which
27 December 2000 to 31 December 2000, wherein he underwent says ''yes" (to] the following questions:
total parotidectomy on 28 December 2000 due to the swelling of his Have you had electrocardiograms, when, why, result? ([Manulife's
right parotid gland and the presence of a tumor, and was found to company physician] wrote the answer which stated that result was
have had a history of being hypertensive, and his kidneys have normal.)
become atretic or shrunken. A copy of each of the Admission and
Discharge Record and PGIS' Interns' Progress Notes and Operative Have you seen a doctor, or had treatment operation on hospital
Record of the [CDH] is attached hereto and made an integral part case during the last five years?
hereof as Annex "K", "K-1", and "K-2", respectively. 12. x x x It is rather strange that [the insured's] parotidectomy was
not included in the report when the scar of that operation can not
(2) Insureds confinement at the CDH from 9 May 2002 to 14 May be concealed because it caused a disfigurement in the right side of
2002, wherein he was diagnosed to have acute pancreatitis, in his face in front and below his ear. This is just too obvious to be
addition to being hypertensive. A copy [of] each of the Insured's overlooked by [Manulife's company physician] who examined and
Admission and Discharge Record and Doctor's History/Progress interviewed [the insured] before accepting the policy. x x x
Notes is attached hereto and made an integral part hereof as Annex
"L" and "L-1", respectively. 13. x x x [Undoubtedly, Manulife] had the option to inquire further
[into the insured's physical condition, because the insured had given
(3) Insured's diagnosis for leptospirosis in 2000. A copy [of] each of it authority to do so] based on the authority given by [the insured.
the Insured's Admission and Discharge Record and History Sheet is And how come that Manulife] was able to gather all [these]
attached hereto and made an integral part hereof as Annex "M" and information now and not before [the insured] was ensured? x x x
"M-1", respectively.
2.8. Due to the Insured's concealment of material facts at the time 16. Moreover, in the comments of [the said] Dr. Lumapas, (Annex
the subject insurance policies were applied for and issued, "D" of the Complaint), he said the physical condition of [the] then
[Manulife] exercised its right to rescind the subject insurance prospective insurance policy holder, [the insured, was] "below
contracts and denied the claims on those policies. average". x x x [Estoppel now bars Manulife from claiming the
x x x x16
Manulife thus prayed that judgment be rendered finding its act of 17. [Especially] worth noting are the [following] comments of [the
rescinding the subject insurance policies proper; declaring these said Dr. Lumapas, on the insured's answer to the questionnaires] -
subject insurance policies null and void; and discharging. it from any (Annex "D" of the Complaint), [to wit:]
obligation whatsoever under these policies.17 "4. d. Have you had any electrocardiograms, when, why, result.
In her Answer, Hermenegilda countered that:
6. [Manulife's own insurance agent, Ms. Elvira Monteclaros herself] - on June 2002 at CDH, Cebu City
assured [the insured,] that there would be no problem regarding the
application for the insurance policy. In tact, it was Monteclaros who = Cardiac clearance for surgery
filled up everything in the questionnaire (Annex "C" of the
[C]omplaint), so that [all that the insured needed to do was sign it,] = Result normal
and it's done. [It was also Ms. Monteclaros who herself] checked in
16. Have you seen a doctor, or had treatment, operation or hospital of BPI Family and Hermenegilda, respectively, representing the
care during the last 5 years? "Yes" admitted at [CDH,] Cebu City by premium refund.
Dr. Lamberto Garcia and Dr. Jorge Ang for Chronic Calculous
Chol[e]cystitis In its Order of October 2, 2006,24 the RTC admitted all these
= Cholecystectomy done [J]une 7[,] 2002 by Dr. Ang
Like Manulife, Hermenegilda, in an1plication of her case, also called
= Biopsy: Gallbladder Chronic Calculous Cholecystitis only one witness to the witness stand: her counsel of record, Atty.
Edgardo Mayol (Atty. Mayol), whose testimony focused on his
= CBC, Hepatitis Panel done - all negative results except hepatitis professional engagement with Hermenegilda and the monetary
antigen (+) expenses he incurred in attending to the hearings in this
case.25cralawred Hermenegilda thereafter filed her Formal Offer of
18. Do you. consume alcohol beverages? If so, how much? Yes, Evidence26 wherein she proffered the following: NME, MEE, DOI,
consumes 12 shots of whisky during socials. the insured's driver's license, her letter dated May 8, 2004
protesting the denial by Manulife of her insurance claim, the
25. The abdomen - Abnormality of any viscus, genitalia or evidence contract of services between her and Atty. Mayol, the official
of hernia or operation - post cholecystectomy scar. receipts for plane tickets, terminal fees, and boarding passes,
attesting to Atty. Mayol's plane travels to and from Cebu City to
26. The head and neck - vision, optic, fundi, hearing, speech, thyroid attend to this case. These were all admitted by the RTC.27
etc. Yes wears eyeglasses for reading. (This is where [Manulife's
company physician] should have written the scar of [the insured's] Ruling of the Regional Trial Court
parotidectomy as shown in the picture).
After due proceedings, the RTC dismissed Manulife's Complaint,
32. From your knowledge of this person would you consider his/ her thus:
health to be Average [ ] Below average [/] Poor [ ] WHEREFORE, premises duly considered, judgment is hereby
rendered DISMISSING the instant case for insufficiency of evidence.
(Underscoring ours)
18. It is interesting to note that the answers in the insurance agent's [Manulife] is hereby ordered to pay [Hermenegilda] actual expenses
form for [the insured] (Annex "C" of the Complaint) did not jibe with in the sum of P40,050.00 and attorney's fees in the sum of P100,000.
the answers [made by] Dr. Lumapas in Annex "D" of the Complaint.
This only boosts Hermenegilda's claim that x x x indeed, it was the [Hermenegilda's] claim for moral and exemplary damages is denied
Manulife's agent herself, (Ms. Montesclaros) who checked all the for lack of evidence.
items in the said form to speed up the insurance application and its
approval, [so she could] get her commission as soon as possible. SO ORDERED.28
The RTC found no merit at all in Manulife's Complaint for rescission
19. In fine, at the time when both insurance policies in question of the subject insurance policies because it utterly failed to prove
were submitted for approval to [Manulife, the latter had had all the that the insured had committed the alleged misrepresentation/s or
forewarnings that should have put it on guard or on notice that concealment/s. In fact, Victoriano, the one and only witness that
things were not what it wanted them to be, reason enough to bestir Manulife called to the witness stand, gave no first-hand, direct
it into exercising greater prudence and caution to further inquire evidence at all relative to the particulars of the alleged
into) the health or medical history of [the insured]. In particular, misrepresentation/s or concealment/s that the insured allegedly
Manulife ought to have noted the fact that the insured was at that practiced or committed against it. This witness did not testify at all
time already 65 years old, x x x that he had a previous operation, in respect to the circumstances under which these documentary
and x x x that his health was "below average. x x x18 exhibits were executed, nor yet about what these documentary
On November 25, 2005, BPI Family filed a Manifestation19 praying exhibits purported to embody. The RTC stressed that the CDH
that either it be dropped from the case or that the case be dismissed medical records that might or could have established the insured's
with respect to it (BPI Family), because it no longer had any interest misrepresentation/s or concealment/s were inadmissible for being
in the subject insurance policies as asssignee because the insureds hearsay, because Manulife did not present the physician or doctor,
obligation with it (BPI Family) had already been settled or paid. Since or any responsible official of the CDH, who could confirm the due
no objection was interposed to this prayer by either Manulife or execution and authenticity of its medical records; that if anything,
Hermenegilda, the RTC granted this prayer in its Order of November Manulife itself admitted in its Reply29 that its very own company
25, 2005.20 physician, Dr. Winifredo Lumapas, had duly noted the insured's scar,
even as the same company physician also categorized in the MEE
Then in the Second Order dated November 25, 2005,21 the RTC the insured's health as "below average"; and that in short, it is
considered the pre-trial as terminated. Trial then ensued. evident that Manulife thus had had ample opportunity to verify and
to inquire further into the insured's medical history commencing
Manulife presented its sole witness in the person of Ms. Jessiebelle from the date of the MEE but opted not to do so; and that if things
Victoriano (Victoriano), the Senior Manager of its Claims and did not come up to its standards or expectations, it was totally at
Settlements Department.22 The oral testimony of this witness liberty to reject the insured's applications altogether, or it could
chiefly involved identifying herself as the Senior Manager of have demanded a higher premium for the insurance coverage.
Manulife's Claims and Settlements Department and also identifying
the following pieces of evidence;23 the subject insurance policies; The RTC further ruled that Hermenegilda was entitled to attorney's
NME, MEE, DOI; the Assignment of Policy No. 6066517-1 to BPI fees in the sum of P100,000.00 and actual expenses in the amount
Family as collateral, dated July 9, 2003; its Letter dated July 10, 2003 of P40,050.00, because she was compelled to litigate to defend her
re: assignment of said Policy; death claim filed by Hermenegilda on interest against Manulife's patently unjustified act in rejecting her
December 10, 2003; the insured's Death Certificate; the Marriage clearly valid and lawful claim. The RTC also found merit in
Contract between the insured and Hermenegilda; copies of CDH's Hermenegilda's claims relative to the expenses she paid her Cebu-
Admission and Discharge Records of the insured for December 2000 based counsel.
re: parotidectomy; copies of CDH's PGIS' Interns' Notes and CDH
Operative Record dated December 28, 2000 re: hypertension; copies In its Order of June 15, 2009,30 the RTC denied tor lack of merit
of CDH's Admission and Discharge Record of the insured for May Manulife's motion for reconsideration31 and Hermenegilda's motion
2002, and the Doctor's History/Progress Notes re: acute pancreatitis for partial reconsideration.32
and hypertension; copies of CDH's Admission and Discharge Record
of the insured for October 2003 re: leptospirosis; letters dated From the RTC's Decision, Manulife filed a Notice of Appeal33 which
March 24, 2004 to Hermenegilda and BPI Family; and BPI Checks was given due course by the RTC in its Order of June 11, 2010.34
deposited on April 10, 2004 and May 14, 2004 to the bank accounts
Ruling of the Court of Appeals against him. The RTC correctly held that the CDH's medical records
that might have established the insured's purported
In its appellate review, the CA virtually adopted en toto the findings misrepresentation/s or concealment/s was inadmissible for being
of facts made by, and the conclusions of law arrived at, by the RTC. hearsay, given the fact that Manulife failed to present the physician
Thus, the CA decreed: or any responsible official of the CDH who could confirm or attest to
WHEREFORE, the instant appeal is DENIED. TI1e assailed Decision the due execution and authenticity of the alleged medical records.
dated April 22, 2008 and Order dated Jtn1e 15, 2009 of the Regional Manulife had utterly failed to prove by convincing evidence that it
Trial Court of Makati, Branch 57, are hereby AFFIRMED. had been beguiled, inveigled, or cajoled into selling the insurance to
the insured who purportedly with malice and deceit passed himself
SO ORDERED.35 off as thoroughly sound and healthy, and thus a fit and proper
The CA, like the RTC, found Manulife's Complaint bereft of legal and applicant for life insurance. Manulife's sole witness gave no
factual bases. The CA ruled that it is settled that misrepresentation evidence at all relative to the particulars of the purported
or concealment in insurance is an affirmative defense, which the concealment or misrepresentation allegedly perpetrated by the
insurer must establish by convincing evidence if it is to avoid liability; insured. In fact, Victoriano merely perfunctorily identified the
and that in this case the one and only witness presented by Manulife documentary exhibits adduced by Manulife; she never testified in
utterly failed to prove the basic elements of the alleged regard to the circumstances attending the execution of these
misrepresentation/s or concealment/s of material facts imputed by documentary exhibits much less in regard to its contents. Of course,
Manulife against the now deceased insured. The CA held that there the mere mechanical act of identifying these documentary exhibits,
is no basis for Manulife's claim that it is exempted from the duty of without the testimonies of the actual participating parties thereto,
proving the insured's supposed misrepresentation/s or adds up to nothing. These documentary exhibits did not
concealment/s, as these had allegedly been admitted already in automatically validate or explain themselves. "The fraudulent intent
Hermenegilda's Answer; that in the absence of authentication by a on the part of the insured must be established to entitle the insurer
competent witness, the purported CDH medical records of the to rescind the contract. Misrepresentation as a defense of the
insured are deemed hearsay hence, inadmissible, and devoid of insurer to avoid liability is an affirmative defense and the duty to
probative value; and that the medical certificate, even if admitted in establish such defense by satisfactory and convincing evidence rests
evidence as an exception to the hearsay rule, was still without upon the insurer."39 For failure of Manulife to prove intent to
probative value because the physician or doctor or the hospital's defraud on the part of the insured, it cannot validly sue for
official who issued it, was not called to the witness stand to validate rescission of insurance contracts.
it or to attest to it.
WHEREFORE, the Petition is DENIED. The assailed Decision of the
Manulife moved for reconsideration36 of the CA's Decision, but this Court of Appeals dated April 26, 2012 in CA-G.R. CV No. 95561 and
was denied by the CA in its Resolution of December 10, 2012;37 its December 10, 2012 Resolution, are AFFIRMED.
hence, the present recourse.

Whether the CA committed any reversible error in affirming the RTC

Decision dismissing Manulife's Complaint for rescission of insurance
contracts for failure to prove concealment on the part of the

Our Ruling

The present recourse essentially challenges anew the findings of fact

by both the RTC and the CA that the Complaint for rescission of the
insurance policies in question will not prosper because Manulife
failed to prove concealment on the part of the insured. This is not
allowed. It is horn-book law that in appeal by certiorari to this Court
under Rule 45 of the Revised Rules of Court, the findings of fact by
the CA especially where such findings of fact are affirmatory or
confirmatory of the findings of fact of the RTC, as in this case, are
conclusive upon this Court. The reason is simple: this Court not
being a trial court, it does not embark upon the task of dissecting,
analyzing, evaluating, calibrating or weighing all over again the
evidence, testimonial or documentary, that the parties adduced
during trial. Of course, there are exceptions to this rule, such as (1)
when the conclusion is grounded upon speculations, surmises or
conjectures; (2) when the inference is manifestly mistaken, absurd
or impossible; (3) when there is a grave abuse of discretion; (4)
when the judgment is based on a misapprehension of facts; (5)
when the findings of fact are conflicting; (6) when there is no
citation of specific evidence on which the factual findings are based;
(7) when the findings of absence of facts is contradicted by the
presence of evidence on record; (8) when the findings of the CA are
contrary to the findings of the RTC; (9) when the CA manifestly
overlooked certain relevant and undisputed facts that, if properly
considered, would justify a different conclusion; (10) when the
findings of the CA are beyond the issues of the case; and, (11) when
the CA's findings are contrary to the admission of both parties.38
We are satisfied that none of these exceptions obtains in the
Petition at bench. Thus, this Court must defer to the findings of fact
of the RTC - as affirmed or confirmed by the CA - that Manulife's
Complaint for rescission of the insurance policies in question was
totally bereft of factual and legal bases because it had utterly failed
to prove that the insured had committed the alleged
misrepresentation/s or concealment/s of material facts imputed