Cases - Part 10 - Devices To Ascertain and Control Risk and Loss

INSUARNCE LAW_PART X_DEVICES TO ASCERTAIN AND CONTROL RISK AND LOSS
G.R. No. 195176
THE INSULAR LIFE ASSURANCE COMPANY, LTD., Petitioner,

vs.
PAZ Y. KHU, FELIPE Y. KHU, JR., and FREDERICK Y. KHU, Respondents.
DECISION
DEL CASTILLO, J.:
The date of last reinstatement mentioned in Section 48 of the Insurance Code pertains to the date that the insurer
approved· the application for reinstatement. However, in light of the ambiguity in the insurance documents to this
case, this Court adopts the interpretation favorable to the insured in determining the date when the reinstatement
was approved.
Assailed in this Petition for Review on Certiorari1 are the June 24, 2010 Decision2 of the Court of Appeals (CA),
which dismissed the Petition in CA-GR. CV No. 81730, and its December 13, 2010 Resolution3 which denied the
petitioner Insular Life Assurance Company Ltd. 's (Insular Life) motion for partial reconsideration. 4
Factual Antecedents
On March 6, 1997, Felipe N. Khu, Sr. (Felipe) applied for a life insurance policy with Insular Life under the latter’s
Diamond Jubilee Insurance Plan. Felipe accomplished the required medical questionnaire wherein he did not
declare any illness or adverse medical condition. Insular Life thereafter issued him Policy Number A000015683
with a face value of P1 million. This took effect on June 22, 1997.5
On June 23, 1999, Felipe’s policy lapsed due to non-payment of the premium covering the period from June 22,
1999 to June 23, 2000.6
On September 7, 1999, Felipe applied for the reinstatement of his policy and paid P25,020.00 as premium. Except
for the change in his occupation of being self-employed to being the Municipal Mayor of Binuangan, Misamis
Oriental, all the other information submitted by Felipe in his application for reinstatement was virtually identical
to those mentioned in his original policy.7
On October 12, 1999, Insular Life advised Felipe that his application for reinstatement may only be considered if he
agreed to certain conditions such as payment of additional premium and the cancellation of the riders pertaining
to premium waiver and accidental death benefits. Felipe agreed to these conditions8 and on December 27, 1999
paid the agreed additional premium of P3,054.50.9
On January 7, 2000, Insular Life issued Endorsement No. PNA000015683, which reads:
This certifies that as agreed by the Insured, the reinstatement of this policy has been approved by the Company
on the understanding that the following changes are made on the policy effective June 22, 1999:
1. The EXTRA PREMIUM is imposed; and
2. The ACCIDENTAL DEATH BENEFIT (ADB) and WAIVER OF PREMIUM DISABILITY (WPD) rider originally
attached to and forming parts of this policy [are] deleted.
In consequence thereof, the premium rates on this policy are adjusted to P28,000.00 annually, P14,843.00 semi-
annually and P7,557.00 quarterly, Philippine currency.10
On June 23, 2000, Felipe paid the annual premium in the amount of P28,000.00 covering the period from June 22,
2000 to June 22, 2001. And on July 2, 2001, he also paid the same amount as annual premium covering the period
from June 22, 2001 to June 21, 2002.11
On September 22, 2001, Felipe died. His Certificate of Death enumerated the following as causes of death:
Immediate cause: a. End stage renal failure, Hepatic failure
Antecedent cause: b. Congestive heart failure, Diffuse myocardial ischemia.
Underlying cause: c. Diabetes Neuropathy, Alcoholism, and Pneumonia. 12
On October 5, 2001, Paz Y. Khu, Felipe Y. Khu, Jr. and Frederick Y. Khu (collectively, Felipe’s beneficiaries or
respondents) filed with Insular Life a claim for benefit under the reinstated policy. This claim was denied. Instead,
Insular Life advised Felipe’s beneficiaries that it had decided to rescind the reinstated policy on the grounds of
concealment and misrepresentation by Felipe.
Hence, respondents instituted a complaint for specific performance with damages. Respondents prayed that the
reinstated life insurance policy be declared valid, enforceable and binding on Insular Life; and that the latter be
ordered to pay unto Felipe’s beneficiaries the proceeds of this policy, among others. 13
In its Answer, Insular Life countered that Felipe did not disclose the ailments (viz., Type 2 Diabetes Mellitus,
Diabetes Nephropathy and Alcoholic Liver Cirrhosis with Ascites) that he already had prior to his application for
reinstatement of his insurance policy; and that it would not have reinstated the insurance policy had Felipe
disclosed the material information on his adverse health condition. It contended that when Felipe died, the policy
was still contestable.14
Ruling of the Regional Trial Court (RTC)
On December 12, 2003, the RTC, Branch 39 of Cagayan de Oro City found15 for Felipe’s beneficiaries, thus:
WHEREFORE, in view of the foregoing, plaintiffs having substantiated [their] claim by preponderance of evidence,
judgment is hereby rendered in their favor and against defendants, ordering the latter to pay jointly and severally
the sum of One Million (P1,000,000.00) Pesos with legal rate of interest from the date of demand until it is fully
paid representing the face value of Plan Diamond Jubilee No. PN-A000015683 issued to insured the late Felipe N.
Khu[,] Sr; the sum of P20,000.00 as moral damages; P30,000.00 as attorney’s fees; P10,000.00 as litigation
expenses.
SO ORDERED.16
In ordering Insular Life to pay Felipe’s beneficiaries, the RTC agreed with the latter’s claim that the insurance policy
was reinstated on June 22, 1999. The RTC cited the ruling in Malayan Insurance Corporation v. Court of
Appeals17 that any ambiguity in a contract of insurance should be resolved strictly against the insurer upon the
principle that an insurance contract is a contract of adhesion.18 The RTC also held that the reinstated insurance
policy had already become incontestable by the time of Felipe’s death on September 22, 2001 since more than two
years had already lapsed from the date of the policy’s reinstatement on June 22, 1999. The RTC noted that since it
was Insular Life itself that supplied all the pertinent forms relative to the reinstated policy, then it is barred from
taking advantage of any ambiguity/obscurity perceived therein particularly as regards the date when the
reinstated insurance policy became effective.
Ruling of the Court of Appeals
On June 24, 2010, the CA issued the assailed Decision19 which contained the following decretal portion:
WHEREFORE, the appeal is DISMISSED. The assailed Judgment of the lower court is AFFIRMED with the
MODIFICATION that the award of moral damages, attorney’s fees and litigation expenses [is] DELETED.
SO ORDERED.20
The CA upheld the RTC’s ruling on the non-contestability of the reinstated insurance policy on the date the
insured died. It declared that contrary to Insular Life’s contention, there in fact exists a genuine ambiguity or
obscurity in the language of the two documents prepared by Insular Life itself, viz., Felipe’s Letter of Acceptance
and Insular Life’s Endorsement; that given the obscurity/ambiguity in the language of these two documents, the
construction/interpretation that favors the insured’s right to recover should be adopted; and that in keeping with
this principle, the insurance policy in dispute must be deemed reinstated as of June 22, 1999. 21
Insular Life moved for partial reconsideration22 but this was denied by the CA in its Resolution of December 13,
2010.23 Hence, the present Petition.
Issue
The fundamental issue to be resolved in this case is whether Felipe’s reinstated life insurance policy is already
incontestable at the time of his death.
Petitioner’s Arguments
In praying for the reversal of the CA Decision, Insular Life basically argues that respondents should not be allowed
to recover on the reinstated insurance policy because the two-year contestability period had not yet lapsed
inasmuch as the insurance policy was reinstated only on December 27, 1999, whereas Felipe died on September
22, 2001;24 that the CA overlooked the fact that Felipe paid the additional extra premium only on December 27,
1999, hence, it is only upon this date that the reinstated policy had become effective; that the CA erred in
declaring that resort to the principles of statutory construction is still necessary to resolve that question given that
the Application for Reinstatement, the Letter of Acceptance and the Endorsement in and by themselves already
embodied unequivocal provisions stipulating that the two-year contestability clause should be reckoned from the
date of approval of the reinstatement; 25 and that Felipe’s misrepresentation and concealment of material facts in
regard to his health or adverse medical condition gave it (Insular Life) the right to rescind the contract of insurance
and consequently, the right to deny the claim of Felipe’s beneficiaries for death benefits under the disputed
policy.26
Respondents’ Arguments
Respondents maintain that the phrase "effective June 22, 1999" found in both the Letter of Acceptance and in the
Endorsement is unclear whether it refers to the subject of the sentence, i.e., the "reinstatement of this policy" or
to the subsequent phrase "changes are made on the policy;" that granting that there was any obscurity or
ambiguity in the insurance policy, the same should be laid at the door of Insular Life as it was this insurance
company that prepared the necessary documents that make up the same;27 and that given the CA’s finding which
effectively affirmed the RTC’s finding on this particular issue, it stands to reason that the insurance policy had
indeed become incontestable upon the date of Felipe’s death. 28
Our Ruling
We deny the Petition.
The Insurance Code pertinently provides that:
Sec. 48. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter,
such right must be exercised previous to the commencement of an action on the contract.
After a policy of life insurance made payable on the death of the insured shall have been in force during the
lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement, the insurer
cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or
misrepresentation of the insured or his agent.
The rationale for this provision was discussed by the Court in Manila Bankers Life Insurance Corporation v. Aban,29
Section 48 regulates both the actions of the insurers and prospective takers of life insurance. It gives insurers
enough time to inquire whether the policy was obtained by fraud, concealment, or misrepresentation; on the
other hand, it forewarns scheming individuals that their attempts at insurance fraud would be timely uncovered –
thus deterring them from venturing into such nefarious enterprise. At the same time, legitimate policy holders are
absolutely protected from unwarranted denial of their claims or delay in the collection of insurance proceeds
occasioned by allegations of fraud, concealment, or misrepresentation by insurers, claims which may no longer be
set up after the two-year period expires as ordained under the law.
xxxx
The Court therefore agrees fully with the appellate court’s pronouncement that-
xxxx
‘The insurer is deemed to have the necessary facilities to discover such fraudulent concealment or
misrepresentation within a period of two (2) years. It is not fair for the insurer to collect the premiums as long as
the insured is still alive, only to raise the issue of fraudulent concealment or misrepresentation when the insured
dies in order to defeat the right of the beneficiary to recover under the policy.
At least two (2) years from the issuance of the policy or its last reinstatement, the beneficiary is given the stability
to recover under the policy when the insured dies. The provision also makes clear when the two-year period
should commence in case the policy should lapse and is reinstated, that is, from the date of the last
reinstatement’.
In Lalican v. The Insular Life Assurance Company, Limited,30 which coincidentally also involves the herein petitioner,
it was there held that the reinstatement of the insured’s policy is to be reckoned from the date when the
application was processed and approved by the insurer. There, we stressed that:
To reinstate a policy means to restore the same to premium-paying status after it has been permitted to lapse. x x
x
xxxx
In the instant case, Eulogio’s death rendered impossible full compliance with the conditions for reinstatement of
Policy No. 9011992. True, Eulogio, before his death, managed to file his Application for Reinstatement and deposit
the amount for payment of his overdue premiums and interests thereon with Malaluan; but Policy No. 9011992
could only be considered reinstated after the Application for Reinstatement had been processed and approved by
Insular Life during Eulogio’s lifetime and good health.31
Thus, it is settled that the reinstatement of an insurance policy should be reckoned from the date when the same
was approved by the insurer.
In this case, the parties differ as to when the reinstatement was actually approved. Insular Life claims that it
approved the reinstatement only on December 27, 1999. On the other hand, respondents contend that it was on
June 22, 1999 that the reinstatement took effect.
The resolution of this issue hinges on the following documents: 1) Letter of Acceptance; and 2) the Endorsement.
The Letter of Acceptance32 wherein Felipe affixed his signature was actually drafted and prepared by Insular Life.
This pro-forma document reads as follows:
LETTER OF ACCEPTANCE
Place: Cag. De [O]ro City
The Insular Life Assurance Co., Ltd.

P.O. Box 128, MANILA
Policy No. A000015683
Gentlemen:
Thru your Reinstatement Section, I/WE learned that this policy may be reinstated provided I/we agree to the
following condition/s indicated with a check mark:
[xx] Accept the imposition of an extra/additional extra premium of [P]5.00 a year per thousand of
insurance; effective June 22, 1999
[ ] Accept the rating on the WPD at ____ at standard rates; the ABD at _____ the standard rates; the SAR
at P____ annually per thousand of Insurance;
[xx] Accept the cancellation of the Premium waiver & Accidental death benefit.
[]
I am/we are agreeable to the above condition/s. Please proceed with the reinstatement of the policy.
Very truly yours,
Felipe N. Khu, Sr.

After Felipe accomplished this form, Insular Life, through its Regional Administrative Manager, Jesse James R.
Toyhorada, issued an Endorsement33 dated January 7, 2000. For emphasis, the Endorsement is again quoted as
follows:
ENDORSEMENT
PN-A000015683
This certifies that as agreed to by the Insured, the reinstatement of this policy has been approved by the Company
on the understanding that the following changes are made on the policy effective June 22, 1999:
1. The EXTRA PREMIUM is imposed; and
2. The ACCIDENTAL DEATH BENEFIT (ADB) and WAIVER OF PREMIUM DISABILITY (WPD) rider originally
attached to and forming parts of this policy is deleted.
In consequence thereof, the PREMIUM RATES on this policy are adjusted to [P]28,000.00 annuallly, [P]14,843.00
semi-annually and [P]7,557.00 quarterly, Philippine Currency.
Cagayan de Oro City, 07 January 2000.

RCV/
(Signed) Authorized Signature
Based on the foregoing, we find that the CA did not commit any error in holding that the subject insurance policy
be considered as reinstated on June 22, 1999. This finding must be upheld not only because it accords with the
evidence, but also because this is favorable to the insured who was not responsible for causing the ambiguity or
obscurity in the insurance contract.34
The CA expounded on this point thus –
The Court discerns a genuine ambiguity or obscurity in the language of the two documents.
In the Letter of Acceptance, Khu declared that he was accepting "the imposition of an extra/additional x x x
premium of P5.00 a year per thousand of insurance; effective June 22, 1999". It is true that the phrase as used in
this particular paragraph does not refer explicitly to the effectivity of the reinstatement. But the Court notes that
the reinstatement was conditioned upon the payment of additional premium not only prospectively, that is, to
cover the remainder of the annual period of coverage, but also retroactively, that is for the period starting June
22, 1999. Hence, by paying the amount of P3,054.50 on December 27, 1999 in addition to the P25,020.00 he had
earlier paid on September 7, 1999, Khu had paid for the insurance coverage starting June 22, 1999. At the very
least, this circumstance has engendered a true lacuna.
In the Endorsement, the obscurity is patent. In the first sentence of the Endorsement, it is not entirely clear
whether the phrase "effective June 22, 1999" refers to the subject of the sentence, namely "the reinstatement of
this policy," or to the subsequent phrase "changes are made on the policy."
The court below is correct. Given the obscurity of the language, the construction favorable to the insured will be
adopted by the courts.
Accordingly, the subject policy is deemed reinstated as of June 22, 1999. Thus, the period of contestability has
lapsed.35
In Eternal Gardens Memorial Park Corporation v. The Philippine American Life Insurance Company, 36 we ruled in
favor of the insured and in favor of the effectivity of the insurance contract in the midst of ambiguity in
the insurance contract provisions. We held that:
It must be remembered that an insurance contract is a contract of adhesion which must be construed liberally in
favor of the insured and strictly against the insurer in order to safeguard the latter’s interest. Thus,
in MalayanInsurance Corporation v. Court of Appeals, this Court held that:
Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any
ambiguity therein in favor of the insured, where the contract or policy is prepared by the insurer. A contract of
insurance, being a contract of adhesion, par excellence, any ambiguity therein should be resolved against the
insurer; in other words, it should be construed liberally in favor of the insured and strictly against the insurer.
Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to
preclude the insurer from noncompliance with its obligations.
xxxx
As a final note, to characterize the insurer and the insured as contracting parties on equal footing is inaccurate at
best. Insurance contracts are wholly prepared by the insurer with vast amounts of experience in the industry
purposefully used to its advantage. More often than not, insurance contracts are contracts of adhesion containing
technical terms and conditions of the industry, confusing if at all understandable to laypersons, that are imposed
on those who wish to avail of insurance. As such, insurance contracts are imbued with public interest that must be
considered whenever the rights and obligations of the insurer and the insured are to be delineated. Hence, in
order to protect the interest of insurance applicants, insurance companies must be obligated to act with haste
upon insurance applications, to either deny or approve the same, or otherwise be bound to honor the application
as a valid, binding, and effective insurance contract.37
Indeed, more than two years had lapsed from the time the subject insurance policy was reinstated on June 22,
1999 vis-a-vis Felipe’s death on September 22, 2001.1âwphi1 As such, the subject insurance policy has already
become incontestable at the time of Felipe’s death.
Finally, we agree with the CA that there is neither basis nor justification for the RTC’s award of moral damages,
attorney’s fees and litigation expenses; hence this award must be deleted.
WHEREFORE, the Petition is DENIED. The assailed .June 24, 2010 Decision and December 13, 2010 Resolution of
the Court of Appeals in CA-GR. CV No. 81730 are AFFIRMED.
SO ORDERED.
G.R. No. 175666 July 29, 2013
MANILA BANKERS LIFE INSURANCE CORPORATION, Petitioner.

vs.
CRESENCIA P. ABAN, Respondent.
DECISION
DEL CASTILLO, J.:
The ultimate aim of Section 48 of the Insurance Code is to compel insurers to solicit business from or provide
insurance coverage only to legitimate and bona fide clients, by requiring them to thoroughly investigate those they
insure within two years from effectivity of the policy and while the insured is still alive. If they do not, they will be
obligated to honor claims on the policies they issue, regardless of fraud, concealment or misrepresentation. The
law assumes that they will do just that and not sit on their laurels, indiscriminately soliciting and accepting
insurance business from any Tom, Dick and Harry.
Assailed in this Petition for Review on Certiorari1 are the September 28, 2005 Decision2 of the Court of Appeals'
(CA) in CA-G.R. CV No. 62286 and its November 9, 2006 Resolution 3 denying the petitioner’s Motion for
Reconsideration.4
Factual Antecedents
On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life Insurance
Corporation (Bankers Life), designating respondent Cresencia P. Aban (Aban), her niece,5 as her beneficiary.
Petitioner issued Insurance Policy No. 747411 (the policy), with a face value of ₱100,000.00, in Sotero’s favor on
August 30, 1993, after the requisite medical examination and payment of the insurance premium. 6
On April 10, 1996,7 when the insurance policy had been in force for more than two years and seven months,
Sotero died. Respondent filed a claim for the insurance proceeds on July 9, 1996. Petitioner conducted an
investigation into the claim,8 and came out with the following findings:
1. Sotero did not personally apply for insurance coverage, as she was illiterate;
2. Sotero was sickly since 1990;
3. Sotero did not have the financial capability to pay the insurance premiums on Insurance Policy No.
747411;
4. Sotero did not sign the July 3, 1993 application for insurance;9 and
5. Respondent was the one who filed the insurance application, and x x x designated herself as the
beneficiary.10
For the above reasons, petitioner denied respondent’s claim on April 16, 1997 and refunded the premiums paid on
the policy.11
On April 24, 1997, petitioner filed a civil case for rescission and/or annulment of the policy, which was docketed
as Civil Case No. 97-867 and assigned to Branch 134 of the Makati Regional Trial Court. The main thesis of the
Complaint was that the policy was obtained by fraud, concealment and/or misrepresentation under the Insurance
Code,12 which thus renders it voidable under Article 1390 13 of the Civil Code.
Respondent filed a Motion to Dismiss14 claiming that petitioner’s cause of action was barred by prescription
pursuant to Section 48 of the Insurance Code, which provides as follows:
Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such
right must be exercised previous to the commencement of an action on the contract.
After a policy of life insurance made payable on the death of the insured shall have been in force during the
lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement, the insurer
cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or
misrepresentation of the insured or his agent.
During the proceedings on the Motion to Dismiss, petitioner’s investigator testified in court, stating among others
that the insurance underwriter who solicited the insurance is a cousin of respondent’s husband, Dindo Aban, 15 and
that it was the respondent who paid the annual premiums on the policy. 16
Ruling of the Regional Trial Court
On December 9, 1997, the trial court issued an Order17 granting respondent’s Motion to Dismiss, thus:
WHEREFORE, defendant CRESENCIA P. ABAN’s Motion to Dismiss is hereby granted. Civil Case No. 97-867 is hereby
dismissed.
SO ORDERED.18
In dismissing the case, the trial court found that Sotero, and not respondent, was the one who procured the
insurance; thus, Sotero could legally take out insurance on her own life and validly designate – as she did –
respondent as the beneficiary. It held further that under Section 48, petitioner had only two years from the
effectivity of the policy to question the same; since the policy had been in force for more than two years,
petitioner is now barred from contesting the same or seeking a rescission or annulment thereof.
Petitioner moved for reconsideration, but in another Order19 dated October 20, 1998, the trial court stood its
ground.
Petitioner interposed an appeal with the CA, docketed as CA-G.R. CV No. 62286. Petitioner questioned the
dismissal of Civil Case No. 97-867, arguing that the trial court erred in applying Section 48 and declaring that
prescription has set in. It contended that since it was respondent – and not Sotero – who obtained the insurance,
the policy issued was rendered void ab initio for want of insurable interest.
On September 28, 2005, the CA issued the assailed Decision, which contained the following decretal portion:
WHEREFORE, in the light of all the foregoing, the instant appeal is DISMISSED for lack of merit.
SO ORDERED.20
The CA thus sustained the trial court. Applying Section 48 to petitioner’s case, the CA held that petitioner may no
longer prove that the subject policy was void ab initio or rescindible by reason of fraudulent concealment or
misrepresentation after the lapse of more than two years from its issuance. It ratiocinated that petitioner was
equipped with ample means to determine, within the first two years of the policy, whether fraud, concealment or
misrepresentation was present when the insurance coverage was obtained. If it failed to do so within the statutory
two-year period, then the insured must be protected and allowed to claim upon the policy.
Petitioner moved for reconsideration,21 but the CA denied the same in its November 9, 2006 Resolution. 22 Hence,
the present Petition.
Issues
Petitioner raises the following issues for resolution:
WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE ORDER OF THE TRIAL COURT DISMISSING THE
COMPLAINT ON THE GROUND OF PRESCRIPTION IN CONTRAVENTION (OF) PERTINENT LAWS AND APPLICABLE
JURISPRUDENCE.
II
WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE APPLICATION OF THE INCONTESTABILITY
PROVISION IN THE INSURANCE CODE BY THE TRIAL COURT.
III
WHETHER THE COURT OF APPEALS ERRED IN DENYING PETITIONER’S MOTION FOR RECONSIDERATION.23
Petitioner’s Arguments
In praying that the CA Decision be reversed and that the case be remanded to the trial court for the conduct of
further proceedings, petitioner argues in its Petition and Reply 24 that Section 48 cannot apply to a case where the
beneficiary under the insurance contract posed as the insured and obtained the policy under fraudulent
circumstances. It adds that respondent, who was merely Sotero’s niece, had no insurable interest in the life of her
aunt.
Relying on the results of the investigation that it conducted after the claim for the insurance proceeds was filed,
petitioner insists that respondent’s claim was spurious, as it appeared that Sotero did not actually apply for
insurance coverage, was unlettered, sickly, and had no visible source of income to pay for the insurance premiums;
and that respondent was an impostor, posing as Sotero and fraudulently obtaining insurance in the latter’s name
without her knowledge and consent.
Petitioner adds that Insurance Policy No. 747411 was void ab initio and could not have given rise to rights and
obligations; as such, the action for the declaration of its nullity or inexistence does not prescribe. 25
Respondent’s Arguments
Respondent, on the other hand, essentially argues in her Comment26 that the CA is correct in applying Section 48.
She adds that petitioner’s new allegation in its Petition that the policy is void ab initio merits no attention, having
failed to raise the same below, as it had claimed originally that the policy was merely voidable.
On the issue of insurable interest, respondent echoes the CA’s pronouncement that since it was Sotero who
obtained the insurance, insurable interest was present. Under Section 10 of the Insurance Code, Sotero had
insurable interest in her own life, and could validly designate anyone as her beneficiary. Respondent submits that
the CA’s findings of fact leading to such conclusion should be respected.
Our Ruling
The Court denies the Petition.
The Court will not depart from the trial and appellate courts’ finding that it was Sotero who obtained the
insurance for herself, designating respondent as her beneficiary. Both courts are in accord in this respect, and the
Court is loath to disturb this. While petitioner insists that its independent investigation on the claim reveals that it
was respondent, posing as Sotero, who obtained the insurance, this claim is no longer feasible in the wake of the
courts’ finding that it was Sotero who obtained the insurance for herself. This finding of fact binds the Court.
With the above crucial finding of fact – that it was Sotero who obtained the insurance for herself – petitioner’s
case is severely weakened, if not totally disproved. Allegations of fraud, which are predicated on respondent’s
alleged posing as Sotero and forgery of her signature in the insurance application, are at once belied by the trial
and appellate courts’ finding that Sotero herself took out the insurance for herself. "Fraudulent intent on the part
of the insured must be established to entitle the insurer to rescind the contract." 27 In the absence of proof of such
fraudulent intent, no right to rescind arises.
Moreover, the results and conclusions arrived at during the investigation conducted unilaterally by petitioner after
the claim was filed may simply be dismissed as self-serving and may not form the basis of a cause of action given
the existence and application of Section 48, as will be discussed at length below.
Section 48 serves a noble purpose, as it regulates the actions of both the insurer and the insured. Under the
provision, an insurer is given two years – from the effectivity of a life insurance contract and while the insured is
alive – to discover or prove that the policy is void ab initio or is rescindible by reason of the fraudulent
concealment or misrepresentation of the insured or his agent. After the two-year period lapses, or when the
insured dies within the period, the insurer must make good on the policy, even though the policy was obtained by
fraud, concealment, or misrepresentation. This is not to say that insurance fraud must be rewarded, but that
insurers who recklessly and indiscriminately solicit and obtain business must be penalized, for such recklessness
and lack of discrimination ultimately work to the detriment of bona fide takers of insurance and the public in
general.
Section 48 regulates both the actions of the insurers and prospective takers of life insurance. It gives insurers
enough time to inquire whether the policy was obtained by fraud, concealment, or misrepresentation; on the
other hand, it forewarns scheming individuals that their attempts at insurance fraud would be timely uncovered –
thus deterring them from venturing into such nefarious enterprise. At the same time, legitimate policy holders are
absolutely protected from unwarranted denial of their claims or delay in the collection of insurance proceeds
occasioned by allegations of fraud, concealment, or misrepresentation by insurers, claims which may no longer be
set up after the two-year period expires as ordained under the law.
Thus, the self-regulating feature of Section 48 lies in the fact that both the insurer and the insured are given the
assurance that any dishonest scheme to obtain life insurance would be exposed, and attempts at unduly denying a
claim would be struck down. Life insurance policies that pass the statutory two-year period are essentially treated
as legitimate and beyond question, and the individuals who wield them are made secure by the thought that they
will be paid promptly upon claim. In this manner, Section 48 contributes to the stability of the insurance industry.
Section 48 prevents a situation where the insurer knowingly continues to accept annual premium payments on life
insurance, only to later on deny a claim on the policy on specious claims of fraudulent concealment and
misrepresentation, such as what obtains in the instant case. Thus, instead of conducting at the first instance an
investigation into the circumstances surrounding the issuance of Insurance Policy No. 747411 which would have
timely exposed the supposed flaws and irregularities attending it as it now professes, petitioner appears to have
turned a blind eye and opted instead to continue collecting the premiums on the policy. For nearly three years,
petitioner collected the premiums and devoted the same to its own profit. It cannot now deny the claim when it is
called to account. Section 48 must be applied to it with full force and effect.
The Court therefore agrees fully with the appellate court’s pronouncement that –
the "incontestability clause" is a provision in law that after a policy of life insurance made payable on the death of
the insured shall have been in force during the lifetime of the insured for a period of two (2) years from the date of
its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindible by
reason of fraudulent concealment or misrepresentation of the insured or his agent.
The purpose of the law is to give protection to the insured or his beneficiary by limiting the rescinding of the
contract of insurance on the ground of fraudulent concealment or misrepresentation to a period of only two (2)
years from the issuance of the policy or its last reinstatement.
The insurer is deemed to have the necessary facilities to discover such fraudulent concealment or
misrepresentation within a period of two (2) years. It is not fair for the insurer to collect the premiums as long as
the insured is still alive, only to raise the issue of fraudulent concealment or misrepresentation when the insured
dies in order to defeat the right of the beneficiary to recover under the policy.
At least two (2) years from the issuance of the policy or its last reinstatement, the beneficiary is given the stability
to recover under the policy when the insured dies. The provision also makes clear when the two-year period
should commence in case the policy should lapse and is reinstated, that is, from the date of the last reinstatement.
After two years, the defenses of concealment or misrepresentation, no matter how patent or well-founded, will no
longer lie.
Congress felt this was a sufficient answer to the various tactics employed by insurance companies to avoid liability.
The so-called "incontestability clause" precludes the insurer from raising the defenses of false representations or
concealment of material facts insofar as health and previous diseases are concerned if the insurance has been in
force for at least two years during the insured’s lifetime. The phrase "during the lifetime" found in Section 48
simply means that the policy is no longer considered in force after the insured has died. The key phrase in the
second paragraph of Section 48 is "for a period of two years."
As borne by the records, the policy was issued on August 30, 1993, the insured died on April 10, 1996, and the
claim was denied on April 16, 1997. The insurance policy was thus in force for a period of 3 years, 7 months, and 24
days. Considering that the insured died after the two-year period, the plaintiff-appellant is, therefore, barred
from proving that the policy is void ab initio by reason of the insured’s fraudulent concealment or
misrepresentation or want of insurable interest on the part of the beneficiary, herein defendant-appellee.
Well-settled is the rule that it is the plaintiff-appellant’s burden to show that the factual findings of the trial court
are not based on substantial evidence or that its conclusions are contrary to applicable law and jurisprudence. The
plaintiff-appellant failed to discharge that burden.28
Petitioner claims that its insurance agent, who solicited the Sotero account, happens to be the cousin of
respondent’s husband, and thus insinuates that both connived to commit insurance fraud. If this were truly the
case, then petitioner would have discovered the scheme earlier if it had in earnest conducted an investigation into
the circumstances surrounding the Sotero policy. But because it did not and it investigated the Sotero account only
after a claim was filed thereon more than two years later, naturally it was unable to detect the scheme. For its
negligence and inaction, the Court cannot sympathize with its plight. Instead, its case precisely provides the strong
argument for requiring insurers to diligently conduct investigations on each policy they issue within the two-year
period mandated under Section 48, and not after claims for insurance proceeds are filed with them.
Besides, if insurers cannot vouch for the integrity and honesty of their insurance agents/salesmen and the
insurance policies they issue, then they should cease doing business. If they could not properly screen their agents
or salesmen before taking them in to market their products, or if they do not thoroughly investigate the insurance
contracts they enter into with their clients, then they have only themselves to blame. Otherwise said, insurers
cannot be allowed to collect premiums on insurance policies, use these amounts collected and invest the same
through the years, generating profits and returns therefrom for their own benefit, and thereafter conveniently
deny insurance claims by questioning the authority or integrity of their own agents or the insurance policies they
issued to their premium-paying clients. This is exactly one of the schemes which Section 48 aims to prevent.
Insurers may not be allowed to delay the payment of claims by filing frivolous cases in court, hoping that the
inevitable may be put off for years – or even decades – by the pendency of these unnecessary court cases. In the
meantime, they benefit from collecting the interest and/or returns on both the premiums previously paid by the
insured and the insurance proceeds which should otherwise go to their beneficiaries. The business of insurance is a
highly regulated commercial activity in the country,29 and is imbued with public interest.30 "An insurance contract
is a contract of adhesion which must be construed liberally in favor of the insured and strictly against the insurer in
order to safeguard the former’s interest."31
WHEREFORE, the Petition is DENIED. The assailed September 28, 2005 Decision and the November 9, 2006
Resolution of the Court of Appeals in CA-G.R. CV No. 62286 are AFFIRMED.
SO ORDERED.
.R. No. 204736, November 28, 2016
MANULIFE PHILIPPINES, INC.,1 Petitioners, v. HERMENEGILDA YBAÑEZ, Respondent.
DECISION
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari2 are the April 26, 2012 Decision3 of the Court of Appeals (CA) in
CA-G.R. CV No. 95561 and its December 10, 2012 Resolution4 which affirmed the April 22, 2008 Decision5 and the
June 15, 2009 Order6 of the Regional Trial Court (RTC), Branch 57, Makati City in Civil Case No. 04-1119.
Factual Antecedents
Before the RTC of Makati City, Manulife Philippines, Inc. (Manulife) instituted a Complaint 7 for Rescission of
Insurance Contracts against Hermenegilda Ybañez (Hermenegilda) and the BPI Family Savings Bank (BPI Family).
This was docketed as Civil Case No. 04-1119.
It is alleged in the Complaint that Insurance Policy Nos. 6066517-18 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 Ybañez (insured), were void due to concealment or misrepresentation of material facts in the latter's
applications for life insurance, particularly the forms entitled Non-Medical Evidence dated August 28, 2002
(NME),10 Medical Evidence Exam dated September 10, 2002 (MEE),11and the Declaration of Insurability in the
Application for Life Insurance (DOI) dated July 9, 2003;12 that Hermenegilda, wife of the said insured, was
revocably designated as beneficiary in the subject insurance policies; that on November 17, 2003, when one of the
subject insurance policies had been in force for only one year and three months, while the other for only four
months, the insured died; that on December 10, 2003, Hermenegilda, now widow to the said insured, filed a
Claimant's Statement-Death Claim13 with respect to the subject insurance policies; that the Death Certificate dated
November 17, 200314 stated that the insured had "Hepatocellular CA., Crd Stage 4, secondary to Uric Acid
Nephropathy; SAM Nephropathy recurrent malignant pleural effusion; NASCVC"; that Manulife conducted an
investigation into the circumstances leading to the said insured's death, in view of the aforementioned entries in
the said insured's Death Certificate; that Manulife thereafter concluded that the insured misrepresented or
concealed material facts at the time the subject insurance policies were applied for; and that for this reason
Manulife accordingly denied Hermenegilda's death claims and refunded the premiums that the insured paid on the
subject insurance policies.15
Manulife also set forth in said Complaint the details of the insured's supposed misrepresentation/s or
concealment/s, to wit:
2.6. On the basis of the authority granted by [Hermenegilda] in her Claimant's Statement (Annex "H"), [Manulife]
conducted an investigation [into] the Insured's medical records and history, and discovered that the Insured
concealed material facts which the law, good faith, and fair dealing required him to reveal when he answered the
[NME] (Annex "C"), [the MEE] (Annex "D"), and [the DOI] (Annex "E"), as follows:
(1) Insured's confinement at the Cebu Doctors' Hospital [CDH] from 27 December 2000 to 31 December 2000,
wherein he underwent total parotidectomy on 28 December 2000 due to the swelling of his right parotid gland
and the presence of a tumor, and was found to have had a history of being hypertensive, and his kidneys have
become atretic or shrunken. A copy of each of the Admission and Discharge Record and PGIS' Interns' Progress
Notes and Operative Record of the [CDH] is attached hereto and made an integral part hereof as Annex "K", "K-1",
and "K-2", respectively.
(2) Insured’s confinement at the CDH from 9 May 2002 to 14 May 2002, wherein he was diagnosed to have acute
pancreatitis, in addition to being hypertensive. A copy [of] each of the Insured's Admission and Discharge Record
and Doctor's History/Progress Notes is attached hereto and made an integral part hereof as Annex "L" and "L-1",
respectively.
(3) Insured's diagnosis for leptospirosis in 2000. A copy [of] each of the Insured's Admission and Discharge Record
and History Sheet is attached hereto and made an integral part hereof as Annex "M" and "M-1", respectively.
xxxx
2.8. Due to the Insured's concealment of material facts at the time the subject insurance policies were applied for
and issued, [Manulife] exercised its right to rescind the subject insurance contracts and denied the claims on those
policies.
x x x x16
Manulife thus prayed that judgment be rendered finding its act of rescinding the subject insurance policies proper;
declaring these subject insurance policies null and void; and discharging. it from any obligation whatsoever under
these policies.17
In her Answer, Hermenegilda countered that:

6. [Manulife's own insurance agent, Ms. Elvira Monteclaros herself] assured [the insured,] that there would be no
problem regarding the application for the insurance policy. In tact, it was Monteclaros who filled up everything in
the questionnaire (Annex "C" of the [C]omplaint), so that [all that the insured needed to do was sign it,] and it's
done. [It was also Ms. Monteclaros who herself] checked in advance all the boxes in Annex "C," [that the insured
himself was required to answer or check].
xxxx
10. The four grounds for denial as enumerated in Annex "N" of the complaint are refuted as follows:
1) [The insured's] hospital confinement on 27 December 2000 at [the CDH was] due to right parotid swelling
secondary to tumor [for which he] underwent Parotidectomy on 28 December 2000. (There is an obvious scar and
disfigurement in the right side of [the insured's] face, in front, and below his ear. This [ought to] have been easily
noticed by [Manulife's company] physician, Dr. [Winifredo] Lumapas.
2) [The insured's] history of Hypertension [has been] noted 03 years prior to [the insured's] admission on 27
December 2000. (This is not something serious or fatal)
3) [The insured's] history of Leptospirosis in 2000. (This is not confirmed)
4) [The insured's] hospital confinement [at the CDH] on 09 May 2002 with findings of Agute Pancreatitis (This is
related to the gallstones of [the insured]. When the gallbladder is diseased, distention is impossible and its
pressure regulating function is lost - a fact that may explain high incidence of pancreatitis in patient with
cholecystic disease. [The insured] had cholecystitis, so his acute pancreatitis is related to the cholecystitis and
chol[e]lithiasis (gallstones).
xxxx
11. [Manulife] accepted [the insured's] application, and now that a claim for the benefits [is] made, [Manulife now]
says that [the insured] misrepresented and concealed his past illnesses[!] In the form filled up by [Dr. Winifredo F.
Lumapas,] Manulife's [company] physician, dated 9/10/02, [the insured] checked the column which says ''yes" (to]
the following questions:
 Have you had electrocardiograms, when, why, result? ([Manulife's company physician]
wrote the answer which stated that result was normal.)
 Have you seen a doctor, or had treatment operation on hospital case during the last five
years?
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 be concealed because it caused a disfigurement in the right side of his face in front and below
his ear. This is just too obvious to be overlooked by [Manulife's company physician] who examined and
interviewed [the insured] before accepting the policy. x x x
13. x x x [Undoubtedly, Manulife] had the option to inquire further [into the insured's physical condition, because
the insured had given it authority to do so] based on the authority given by [the insured. And how come that
Manulife] was able to gather all [these] information now and not before [the insured] was ensured? x x x
xxxx
16. Moreover, in the comments of [the said] Dr. Lumapas, (Annex "D" of the Complaint), he said the physical
condition of [the] then prospective insurance policy holder, [the insured, was] "below average". x x x [Estoppel
now bars Manulife from claiming the contrary.]
17. [Especially] worth noting are the [following] comments of [the said Dr. Lumapas, on the insured's answer to the
questionnaires] - (Annex "D" of the Complaint), [to wit:]
"4. d. Have you had any electrocardiograms, when, why, result. "Yes"
- on June 2002 at CDH, Cebu City

= Cardiac clearance for surgery
= Result normal
16. Have you seen a doctor, or had treatment, operation or hospital care during the last 5 years? "Yes" admitted at
[CDH,] Cebu City by Dr. Lamberto Garcia and Dr. Jorge Ang for Chronic Calculous Chol[e]cystitis
= Cholecystectomy done [J]une 7[,] 2002 by Dr. Ang
= Biopsy: Gallbladder Chronic Calculous Cholecystitis
= CBC, Hepatitis Panel done - all negative results except hepatitis antigen(+)
18. Do you. consume alcohol beverages? If so, how much? Yes, consumes 12 shots of whisky during socials.
25. The abdomen - Abnormality of any viscus, genitalia or evidence of hernia or operation - post cholecystectomy
scar.
26. The head and neck - vision, optic, fundi, hearing, speech, thyroid etc. Yes wears eyeglasses for reading. (This is
where [Manulife's company physician] should have written the scar of [the insured's] parotidectomy as shown in
the picture).
32. From your knowledge of this person would you consider his/ her health to be Average [ ] Below average [/]
Poor [ ]
(Underscoring ours)
18. It is interesting to note that the answers in the insurance agent's form for [the insured] (Annex "C" of the
Complaint) did not jibe with 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 Manulife's agent herself, (Ms. Montesclaros) who checked all the
items in the said form to speed up the insurance application and its approval, [so she could] get her commission as
soon as possible.
19. In fine, at the time when both insurance policies in question were submitted for approval to [Manulife, the
latter had had all the forewarnings that should have put it on guard or on notice that things were not what it
wanted them to be, reason enough to bestir it into exercising greater prudence and caution to further inquire into)
the health or medical history of [the insured]. In particular, Manulife ought to have noted the fact that the insured
was at that time already 65 years old, x x x that he had a previous operation, and x x x that his health was "below
average. x x x18
On November 25, 2005, BPI Family filed a Manifestation19 praying that either it be dropped from the case or that
the case be dismissed with respect to it (BPI Family), because it no longer had any interest in the subject insurance
policies as asssignee because the insureds obligation with it (BPI Family) had already been settled or paid. Since no
objection was interposed to this prayer by either Manulife or Hermenegilda, the RTC granted this prayer in its
Order of November 25, 2005.20
Then in the Second Order dated November 25, 2005,21 the RTC considered the pre-trial as terminated. Trial then
ensued.
Manulife presented its sole witness in the person of Ms. Jessiebelle Victoriano (Victoriano), the Senior Manager of
its Claims and Settlements Department.22 The oral testimony of this witness chiefly involved identifying herself as
the Senior Manager of Manulife's Claims and Settlements Department and also identifying the following pieces of
evidence;23 the subject insurance policies; NME, MEE, DOI; the Assignment of Policy No. 6066517-1 to BPI Family
as collateral, dated July 9, 2003; its Letter dated July 10, 2003 re: assignment of said Policy; death claim filed by
Hermenegilda on December 10, 2003; the insured's Death Certificate; the Marriage Contract between the insured
and Hermenegilda; copies of CDH's Admission and Discharge Records of the insured for December 2000 re:
parotidectomy; copies of CDH's PGIS' Interns' Notes and CDH Operative Record dated December 28, 2000 re:
hypertension; copies of CDH's Admission and Discharge Record of the insured for May 2002, and the Doctor's
History/Progress Notes re: acute pancreatitis and hypertension; copies of CDH's Admission and Discharge Record
of the insured for October 2003 re: leptospirosis; letters dated March 24, 2004 to Hermenegilda and BPI Family;
and BPI Checks deposited on April 10, 2004 and May 14, 2004 to the bank accounts of BPI Family and
Hermenegilda, respectively, representing the premium refund.
In its Order of October 2, 2006,24 the RTC admitted all these exhibits.
Like Manulife, Hermenegilda, in an1plication of her case, also called only one witness to the witness stand: her
counsel of record, Atty. Edgardo Mayol (Atty. Mayol), whose testimony focused on his professional engagement
with Hermenegilda and the monetary expenses he incurred in attending to the hearings in this
case.25cralawred Hermenegilda thereafter filed her Formal Offer of Evidence26 wherein she proffered the
following: NME, MEE, DOI, the insured's driver's license, her letter dated May 8, 2004 protesting the denial by
Manulife of her insurance claim, the contract of services between her and Atty. Mayol, the official receipts for
plane tickets, terminal fees, and boarding passes, attesting to Atty. Mayol's plane travels to and from Cebu City to
attend to this case. These were all admitted by the RTC. 27
Ruling of the Regional Trial Court
After due proceedings, the RTC dismissed Manulife's Complaint, thus:

WHEREFORE, premises duly considered, judgment is hereby rendered DISMISSING the instant case for insufficiency
of evidence.
[Manulife] is hereby ordered to pay [Hermenegilda] actual expenses in the sum of P40,050.00 and attorney's fees
in the sum of P100,000.
[Hermenegilda's] claim for moral and exemplary damages is denied for lack of evidence.
SO ORDERED.28
The RTC found no merit at all in Manulife's Complaint for rescission of the subject insurance policies because it
utterly failed to prove that the insured had committed the alleged misrepresentation/s or concealment/s. In fact,
Victoriano, the one and only witness that Manulife called to the witness stand, gave no firsthand, direct evidence
at all relative to the particulars of the alleged misrepresentation/s or concealment/s that the insured allegedly
practiced or committed against it. This witness did not testify at all in respect to the circumstances under which
these documentary exhibits were executed, nor yet about what these documentary exhibits purported to embody.
The RTC stressed that the CDH medical records that might or could have established the insured's
misrepresentation/s or concealment/s were inadmissible for being hearsay, because Manulife did not present the
physician or doctor, or any responsible official of the CDH, who could confirm the due execution and authenticity
of its medical records; that if anything, Manulife itself admitted in its Reply 29 that its very own company physician,
Dr. Winifredo Lumapas, had duly noted the insured's scar, even as the same company physician also categorized in
the MEE the insured's health as "below average"; and that in short, it is evident that Manulife thus had had ample
opportunity to verify and to inquire further into the insured's medical history commencing from the date of the
MEE but opted not to do so; and that if things did not come up to its standards or expectations, it was totally at
liberty to reject the insured's applications altogether, or it could have demanded a higher premium for the
insurance coverage.
The RTC further ruled that Hermenegilda was entitled to attorney's fees in the sum of P100,000.00 and actual
expenses in the amount of P40,050.00, because she was compelled to litigate to defend her interest against
Manulife's patently unjustified act in rejecting her clearly valid and lawful claim. The RTC also found merit in
Hermenegilda's claims relative to the expenses she paid her Cebu-based counsel.
In its Order of June 15, 2009,30 the RTC denied tor lack of merit Manulife's motion for reconsideration 31and
Hermenegilda's motion for partial reconsideration.32
From the RTC's Decision, Manulife filed a Notice of Appeal 33 which was given due course by the RTC in its Order of
June 11, 2010.34
In its appellate review, the CA virtually adopted en toto the findings of facts made by, and the conclusions of law
arrived at, by the RTC. Thus, the CA decreed:
WHEREFORE, the instant appeal is DENIED. TI1e assailed Decision dated April 22, 2008 and Order dated Jtn1e 15,
2009 of the Regional Trial Court of Makati, Branch 57, are hereby AFFIRMED.
SO ORDERED.35
The CA, like the RTC, found Manulife's Complaint bereft of legal and factual bases. The CA ruled that it is settled
that misrepresentation or concealment in insurance is an affirmative defense, which the insurer must establish by
convincing evidence if it is to avoid liability; and that in this case the one and only witness presented by Manulife
utterly failed to prove the basic elements of the alleged misrepresentation/s or concealment/s of material facts
imputed by Manulife against the now deceased insured. The CA held that there is no basis for Manulife's claim that
it is exempted from the duty of proving the insured's supposed misrepresentation/s or concealment/s, as these
had allegedly been admitted already in Hermenegilda's Answer; that in the absence of authentication by a
competent witness, the purported CDH medical records of the insured are deemed hearsay hence, inadmissible,
and devoid of probative value; and that the medical certificate, even if admitted in evidence as an exception to the
hearsay rule, was still without probative value because the physician or doctor or the hospital's official who issued
it, was not called to the witness stand to validate it or to attest to it.
Manulife moved for reconsideration36 of the CA's Decision, but this was denied by the CA in its Resolution of
December 10, 2012;37 hence, the present recourse.
Issue
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 insured.
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 against him. The RTC correctly held that the CDH's medical records that might have
established the insured's purported misrepresentation/s or concealment/s was inadmissible for being hearsay,
given the fact that Manulife failed to present the physician or any responsible official of the CDH who could
confirm or attest to the due execution and authenticity of the alleged medical records. Manulife had utterly failed
to prove by convincing evidence that it had been beguiled, inveigled, or cajoled into selling the insurance to the
insured who purportedly with malice and deceit passed himself off as thoroughly sound and healthy, and thus a fit
and proper applicant for life insurance. Manulife's sole witness gave no evidence at all relative to the particulars of
the purported concealment or misrepresentation allegedly perpetrated by the insured. In fact, Victoriano merely
perfunctorily identified the documentary exhibits adduced by Manulife; she never testified in regard to the
circumstances attending the execution of these documentary exhibits much less in regard to its contents. Of
course, the mere mechanical act of identifying these documentary exhibits, without the testimonies of the actual
participating parties thereto, adds up to nothing. These documentary exhibits did not automatically validate or
explain themselves. "The fraudulent intent on the part of the insured must be established to entitle the insurer to
rescind the contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and
the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer." 39 For failure of
Manulife to prove intent to defraud on the part of the insured, it cannot validly sue for rescission of insurance
contracts.
WHEREFORE, the Petition is DENIED. The assailed Decision of the Court of Appeals dated April 26, 2012 in CA-G.R.
CV No. 95561 and its December 10, 2012 Resolution, are AFFIRMED.
SO ORDERED. cralawlawlibrary
G.R. No. 198174 September 2, 2013
ALPHA INSURANCE AND SURETY CO., PETITIONER,

vs.
ARSENIA SONIA CASTOR, RESPONDENT.
DECISION
PERALTA, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision 1 dated
May 31, 2011 and Resolution2 dated August 10, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 93027.
The facts follow.
On February 21, 2007, respondent entered into a contract of insurance, Motor Car Policy No. MAND/CV-00186,
with petitioner, involving her motor vehicle, a Toyota Revo DLX DSL. The contract of insurance obligates the
petitioner to pay the respondent the amount of Six Hundred Thirty Thousand Pesos (₱630,000.00) in case of loss or
damage to said vehicle during the period covered, which is from February 26, 2007 to February 26, 2008.
On April 16, 2007, at about 9:00 a.m., respondent instructed her driver, Jose Joel Salazar Lanuza (Lanuza), to bring
the above-described vehicle to a nearby auto-shop for a tune-up. However, Lanuza no longer returned the motor
vehicle to respondent and despite diligent efforts to locate the same, said efforts proved futile. Resultantly,
respondent promptly reported the incident to the police and concomitantly notified petitioner of the said loss and
demanded payment of the insurance proceeds in the total sum of ₱630,000.00.
In a letter dated July 5, 2007, petitioner denied the insurance claim of respondent, stating among others, thus:
Upon verification of the documents submitted, particularly the Police Report and your Affidavit, which states that
the culprit, who stole the Insure[d] unit, is employed with you. We would like to invite you on the provision of the
Policy under Exceptions to Section-III, which we quote:
1.) The Company shall not be liable for:
xxxx
(4) Any malicious damage caused by the Insured, any member of his family or by "A PERSON IN THE INSURED’S
SERVICE."
In view [of] the foregoing, we regret that we cannot act favorably on your claim.
In letters dated July 12, 2007 and August 3, 2007, respondent reiterated her claim and argued that the exception
refers to damage of the motor vehicle and not to its loss. However, petitioner’s denial of respondent’s insured
claim remains firm.
Accordingly, respondent filed a Complaint for Sum of Money with Damages against petitioner before the Regional
Trial Court (RTC) of Quezon City on September 10, 2007.
In a Decision dated December 19, 2008, the RTC of Quezon City ruled in favor of respondent in this wise:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant
ordering the latter as follows:
To pay plaintiff the amount of ₱466,000.00 plus legal interest of 6% per annum from the time of demand up to the
time the amount is fully settled;
To pay attorney’s fees in the sum of ₱65,000.00; and
To pay the costs of suit.
All other claims not granted are hereby denied for lack of legal and factual basis.3
Aggrieved, petitioner filed an appeal with the CA.
On May 31, 2011, the CA rendered a Decision affirming in toto the RTC of Quezon City’s decision. The fallo reads:
WHEREFORE, in view of all the foregoing, the appeal is DENIED. Accordingly, the Decision, dated December 19,
2008, of Branch 215 of the Regional Trial Court of Quezon City, in Civil Case No. Q-07-61099, is hereby AFFIRMED
in toto.
SO ORDERED.4
Petitioner filed a Motion for Reconsideration against said decision, but the same was denied in a Resolution dated
August 10, 2011.
Hence, the present petition wherein petitioner raises the following grounds for the allowance of its petition:
WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, IT ERRED AND GROSSLY OR GRAVELY ABUSED ITS
DISCRETION WHEN IT ADJUDGED IN FAVOR OF THE PRIVATE RESPONDENT AND AGAINST THE PETITIONER AND
RULED THAT EXCEPTION DOES NOT COVER LOSS BUT ONLY DAMAGE BECAUSE THE TERMS OF THE INSURANCE
POLICY ARE [AMBIGUOUS] EQUIVOCAL OR UNCERTAIN, SUCH THAT THE PARTIES THEMSELVES DISAGREE ABOUT
THE MEANING OF PARTICULAR PROVISIONS, THE POLICY WILL BE CONSTRUED BY THE COURTS LIBERALLY IN
FAVOR OF THE ASSURED AND STRICTLY AGAINST THE INSURER.
WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, IT ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT [AFFIRMED] IN TOTO THE JUDGMENT OF THE TRIAL COURT.5
Simply, the core issue boils down to whether or not the loss of respondent’s vehicle is excluded under the
insurance policy.
We rule in the negative.
Significant portions of Section III of the Insurance Policy states:
SECTION III – LOSS OR DAMAGE
The Company will, subject to the Limits of Liability, indemnify the Insured against loss of or damage to the
Schedule Vehicle and its accessories and spare parts whilst thereon:
(a)
by accidental collision or overturning, or collision or overturning consequent upon mechanical breakdown or

consequent upon wear and tear;
(b)
by fire, external explosion, self-ignition or lightning or burglary, housebreaking or theft;
(c)
by malicious act;
(d)
whilst in transit (including the processes of loading and unloading) incidental to such transit by road, rail, inland
waterway, lift or elevator.
xxxx
EXCEPTIONS TO SECTION III
The Company shall not be liable to pay for:

Loss or Damage in respect of any claim or series of claims arising out of one event, the first amount of each and
every loss for each and every vehicle insured by this Policy, such amount being equal to one percent (1.00%) of the
Insured’s estimate of Fair Market Value as shown in the Policy Schedule with a minimum deductible amount of
Php3,000.00;
Consequential loss, depreciation, wear and tear, mechanical or electrical breakdowns, failures or breakages;
Damage to tires, unless the Schedule Vehicle is damaged at the same time;
Any malicious damage caused by the Insured, any member of his family or by a person in the Insured’s service. 6
In denying respondent’s claim, petitioner takes exception by arguing that the word "damage," under paragraph 4
of "Exceptions to Section III," means loss due to injury or harm to person, property or reputation, and should be
construed to cover malicious "loss" as in "theft." Thus, it asserts that the loss of respondent’s vehicle as a result of
it being stolen by the latter’s driver is excluded from the policy.
We do not agree.
Ruling in favor of respondent, the RTC of Quezon City scrupulously elaborated that theft perpetrated by the driver
of the insured is not an exception to the coverage from the insurance policy, since Section III thereof did not
qualify as to who would commit the theft. Thus:
Theft perpetrated by a driver of the insured is not an exception to the coverage from the insurance policy subject
of this case. This is evident from the very provision of Section III – "Loss or Damage." The insurance company,
subject to the limits of liability, is obligated to indemnify the insured against theft. Said provision does not qualify
as to who would commit the theft. Thus, even if the same is committed by the driver of the insured, there being no
categorical declaration of exception, the same must be covered. As correctly pointed out by the plaintiff, "(A)n
insurance contract should be interpreted as to carry out the purpose for which the parties entered into the
contract which is to insure against risks of loss or damage to the goods. Such interpretation should result from the
natural and reasonable meaning of language in the policy. Where restrictive provisions are open to two
interpretations, that which is most favorable to the insured is adopted." The defendant would argue that if the
person employed by the insured would commit the theft and the insurer would be held liable, then this would
result to an absurd situation where the insurer would also be held liable if the insured would commit the theft.
This argument is certainly flawed. Of course, if the theft would be committed by the insured himself, the same
would be an exception to the coverage since in that case there would be fraud on the part of the insured or breach
of material warranty under Section 69 of the Insurance Code. 7
Moreover, contracts of insurance, like other contracts, are to be construed according to the sense and meaning of
the terms which the parties themselves have used. If such terms are clear and unambiguous, they must be taken
and understood in their plain, ordinary and popular sense.8 Accordingly, in interpreting the exclusions in an
insurance contract, the terms used specifying the excluded classes therein are to be given their meaning as
understood in common speech.9
Adverse to petitioner’s claim, the words "loss" and "damage" mean different things in common ordinary usage.
The word "loss" refers to the act or fact of losing, or failure to keep possession, while the word "damage" means
deterioration or injury to property.1âwphi1
Therefore, petitioner cannot exclude the loss of respondent’s vehicle under the insurance policy under paragraph
4 of "Exceptions to Section III," since the same refers only to "malicious damage," or more specifically, "injury" to
the motor vehicle caused by a person under the insured’s service. Paragraph 4 clearly does not contemplate "loss
of property," as what happened in the instant case.
Further, the CA aptly ruled that "malicious damage," as provided for in the subject policy as one of the exceptions
from coverage, is the damage that is the direct result from the deliberate or willful act of the insured, members of
his family, and any person in the insured’s service, whose clear plan or purpose was to cause damage to the
insured vehicle for purposes of defrauding the insurer, viz.:
This interpretation by the Court is bolstered by the observation that the subject policy appears to clearly delineate
between the terms "loss" and "damage" by using both terms throughout the said policy. x x x
xxxx
If the intention of the defendant-appellant was to include the term "loss" within the term "damage" then logic
dictates that it should have used the term "damage" alone in the entire policy or otherwise included a clear
definition of the said term as part of the provisions of the said insurance contract. Which is why the Court finds it
puzzling that in the said policy’s provision detailing the exceptions to the policy’s coverage in Section III thereof,
which is one of the crucial parts in the insurance contract, the insurer, after liberally using the words "loss" and
"damage" in the entire policy, suddenly went specific by using the word "damage" only in the policy’s exception
regarding "malicious damage." Now, the defendant-appellant would like this Court to believe that it really
intended the word "damage" in the term "malicious damage" to include the theft of the insured vehicle.
The Court does not find the particular contention to be well taken.
True, it is a basic rule in the interpretation of contracts that the terms of a contract are to be construed according
to the sense and meaning of the terms which the parties thereto have used. In the case of property insurance
policies, the evident intention of the contracting parties, i.e., the insurer and the assured, determine the import of
the various terms and provisions embodied in the policy. However, when the terms of the insurance policy are
ambiguous, equivocal or uncertain, such that the parties themselves disagree about the meaning of particular
provisions, the policy will be construed by the courts liberally in favor of the assured and strictly against the
insurer.10
Lastly, a contract of insurance is a contract of adhesion. So, when the terms of the insurance contract contain
limitations on liability, courts should construe them in such a way as to preclude the insurer from non-compliance
with his obligation. Thus, in Eternal Gardens Memorial Park Corporation v. Philippine American Life Insurance
Company,11 this Court ruled –
It must be remembered that an insurance contract is a contract of adhesion which must be construed liberally in
favor of the insured and strictly against the insurer in order to safeguard the latter’s interest. Thus, in Malayan
Insurance Corporation v. Court of Appeals, this Court held that:
Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any
ambiguity therein in favor of the insured, where the contract or policy is prepared by the insurer. A contract of
insurance, being a contract of adhesion, par excellence, any ambiguity therein should be resolved against the
insurer; in other words, it should be construed liberally in favor of the insured and strictly against the insurer.
Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to
preclude the insurer from non-compliance with its obligations.
In the more recent case of Philamcare Health Systems, Inc. v. Court of Appeals, we reiterated the above ruling,
stating that:
When the terms of insurance contract contain limitations on liability, courts should construe them in such a way as
to preclude the insurer from non-compliance with his obligation. Being a contract of adhesion, the terms of an
insurance contract are to be construed strictly against the party which prepared the contract, the insurer. By
reason of the exclusive control of the insurance company over the terms and phraseology of the insurance
contract, ambiguity must be strictly interpreted against the insurer and liberally in favor of the insured, especially
to avoid forfeiture.12
WHEREFORE, premises considered, the instant Petition for Review on Certiorari is DENIED. Accordingly, the
Decision dated May 31, 2011 and Resolution dated August 10, 2011 of the Court of Appeals are hereby AFFIRMED.
SO ORDERED.
MA. LOURDES S. FLORENDO, G.R. No. 186983

Petitioner,
Present:
VELASCO, JR., J., Chairperson,
- versus - PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.
PHILAM PLANS, INC.,
PERLA ABCEDE and Promulgated:
MA. CELESTE ABCEDE,
Respondents. February 22, 2012
x --------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
This case is about an insureds alleged concealment in his pension plan application of his true state of health
and its effect on the life insurance portion of that plan in case of death.
The Facts and the Case
On October 23, 1997 Manuel Florendo filed an application for comprehensive pension plan with respondent
Philam Plans, Inc. (Philam Plans) after some convincing by respondent Perla Abcede. The plan had a pre-need price
of P997,050.00, payable in 10 years, and had a maturity value of P2,890,000.00 after 20 years.[1] Manuel signed the
application and left to Perla the task of supplying the information needed in the application.[2] Respondent Ma.
Celeste Abcede, Perlas daughter, signed the application as sales counselor. [3]
Aside from pension benefits, the comprehensive pension plan also provided life insurance coverage to
Florendo.[4] This was covered by a Group Master Policy that Philippine American Life Insurance Company (Philam
Life) issued to Philam Plans.[5] Under the master policy, Philam Life was to automatically provide life insurance
coverage, including accidental death, to all who signed up for Philam Plans comprehensive pension plan. [6] If the plan
holder died before the maturity of the plan, his beneficiary was to instead receive the proceeds of the life insurance,
equivalent to the pre-need price. Further, the life insurance was to take care of any unpaid premium until the
pension plan matured, entitling the beneficiary to the maturity value of the pension plan. [7]
On October 30, 1997 Philam Plans issued Pension Plan Agreement PP43005584[8] to Manuel, with petitioner
Ma. Lourdes S. Florendo, his wife, as beneficiary. In time, Manuel paid his quarterly premiums.[9]
Eleven months later or on September 15, 1998, Manuel died of blood
poisoning. Subsequently, Lourdes filed a claim with Philam Plans for the payment of the benefits under her husbands
plan.[10] Because Manuel died before his pension plan matured and his wife was to get only the benefits of his life
insurance, Philam Plans forwarded her claim to Philam Life.[11]
On May 3, 1999 Philam Plans wrote Lourdes a letter,[12] declining her claim. Philam Life found that Manuel
was on maintenance medicine for his heart and had an implanted pacemaker. Further, he suffered from diabetes
mellitus and was taking insulin. Lourdes renewed her demand for payment under the plan [13] but Philam Plans
rejected it,[14] prompting her to file the present action against the pension plan company before the Regional Trial
Court (RTC) of Quezon City.[15]
On March 30, 2006 the RTC rendered judgment,[16] ordering Philam Plans, Perla and Ma. Celeste, solidarily,
to pay Lourdes all the benefits from her husbands pension plan, namely: P997,050.00, the proceeds of his term
insurance, and P2,890,000.00 lump sum pension benefit upon maturity of his plan; P100,000.00 as moral damages;
and to pay the costs of the suit. The RTC ruled that Manuel was not guilty of concealing the state of his health from
his pension plan application.
On December 18, 2007 the Court of Appeals (CA) reversed the RTC decision, [17] holding that insurance
policies are traditionally contracts uberrimae fidae or contracts of utmost good faith. As such, it required Manuel to
disclose to Philam Plans conditions affecting the risk of which he was aware or material facts that he knew or ought
to know.[18]
Issues Presented
The issues presented in this case are:
1. Whether or not the CA erred in finding Manuel guilty of concealing his illness when he kept blank and did
not answer questions in his pension plan application regarding the ailments he suffered from;
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 condition of Manuels health in the pension plan application; and
3. Whether or not the CA erred in finding that Philam Plans approval of Manuels pension plan application
and acceptance of his premium payments precluded it from denying Lourdes claim.
Rulings of the Court
One. Lourdes points out that, seeing the unfilled spaces in Manuels pension plan application relating to his medical
history, Philam Plans should have returned it to him for completion. Since Philam Plans chose to approve the
application just as it was, it cannot cry concealment on Manuels part. Further, Lourdes adds that Philam Plans never
queried Manuel directly regarding the state of his health. Consequently, it could not blame him for not mentioning
it.[19]
But Lourdes is shifting to Philam Plans the burden of putting on the pension plan application the true state of
Manuels health. She forgets that since Philam Plans waived medical examination for Manuel, it had to rely largely
on his stating the truth regarding his health in his application. For, after all, he knew more than anyone that he had
been under treatment for heart condition and diabetes for more than five years preceding his submission of that
application. But he kept those crucial facts from Philam Plans.
Besides, when Manuel signed the pension plan application, he adopted as his own the written representations and
declarations embodied in it. It is clear from these representations that he concealed his chronic heart ailment and
diabetes from Philam Plans. The pertinent portion of his representations and declarations read as follows:
I hereby represent and declare to the best of my knowledge that:
xxxx
(c) I have never been treated for heart condition, high blood pressure, cancer, diabetes, lung,
kidney or stomach disorder or any other physical impairment in the last five years.
(d) I am in good health and physical condition.
If your answer to any of the statements above reveal otherwise, please give details in the space
provided for:
Date of confinement : ____________________________

Name of Hospital or Clinic : ____________________________
Name of Attending Physician : ____________________________
Findings : ____________________________
Others: (Please specify) : ____________________________
x x x x.[20] (Emphasis supplied)
Since Manuel signed the application without filling in the details regarding his continuing treatments for
heart condition and diabetes, the assumption is that he has never been treated for the said illnesses in the last five
years preceding his application. This is implicit from the phrase If your answer to any of the statements above
(specifically, the statement: I have never been treated for heart condition or diabetes) reveal otherwise, please give
details in the space provided for. But this is untrue since he had been on Coumadin, a treatment for venous
thrombosis,[21] and insulin, a drug used in the treatment of diabetes mellitus, at that time. [22]
Lourdes insists that Manuel had concealed nothing since Perla, the soliciting agent, knew that Manuel had
a pacemaker implanted on his chest in the 70s or about 20 years before he signed up for the pension plan.[23] But by
its tenor, the responsibility for preparing the application belonged to Manuel. Nothing in it implies that someone
else may provide the information that Philam Plans needed. Manuel cannot sign the application and disown the
responsibility for having it filled up. If he furnished Perla the needed information and delegated to her the filling up
of the application, then she acted on his instruction, not on Philam Plans instruction.
Lourdes next points out that it made no difference if Manuel failed 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 disclosure
contemplated.[24] But a pacemaker is an electronic device implanted into the body and connected to the wall of the
heart, designed to provide regular, mild, electric shock that stimulates the contraction of the heart muscles and
restores normalcy to the heartbeat.[25] That Manuel still had his pacemaker when he applied for a pension plan in
October 1997 is an admission that he remained under treatment for irregular heartbeat within five years preceding
that application.
Besides, as already stated, Manuel had been taking medicine for his heart condition and diabetes when he
submitted his pension plan application. These clearly fell within the five-year period. More, even if Perlas knowledge
of Manuels pacemaker may be applied to Philam Plans under the theory of imputed knowledge, [26] it is not claimed
that Perla was aware of his two other afflictions that needed medical treatments. Pursuant to Section 27[27] of the
Insurance Code, Manuels concealment entitles Philam Plans to rescind its contract of insurance with him.
Two. Lourdes contends that the mere fact that Manuel signed the 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 state of health. Since there is no
evidence of collusion between them, Perlas fault must be considered solely her own and cannot prejudice Manuel. [28]
But Manuel forgot that in signing the pension plan application, he certified that he wrote all the information stated
in it or had someone do it under his direction. Thus:
APPLICATION FOR PENSION PLAN

(Comprehensive)
I hereby apply to purchase from PHILAM PLANS, INC. a Pension Plan Program described herein in
accordance with the General Provisions set forth in this application and hereby certify that the
date and other information stated herein are written by me or under my direction. x x
x.[29] (Emphasis supplied)
Assuming that it was Perla who filled up the application form, Manuel is still bound by what it contains since
he certified that he authorized her action. Philam Plans had every right to act on the 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 approval of his application and that what is written on his application made no difference to
the insurance company. But, indubitably, Manuel was made aware when he signed the pension plan application
that, in granting the same, Philam Plans and Philam Life were acting on the truth of the representations contained
in that application. Thus:
DECLARATIONS AND REPRESENTATIONS
xxxx
I agree that the insurance coverage of this application is based on the truth of the
foregoing representations and is subject to the provisions of the Group Life Insurance Policy issued
by THE PHILIPPINE AMERICAN LIFE INSURANCE CO. to PHILAM PLANS, INC.[30] (Emphasis supplied)
As the Court said in New Life Enterprises v. Court of Appeals:[31]
It may be true that x x x insured persons may accept policies without reading them, and that this
is not negligence per se. But, this is not without any exception. It is and was incumbent upon
petitioner Sy to read the insurance contracts, and this can be reasonably expected of him
considering that he has been a businessman since 1965 and the contract concerns indemnity in
case of loss in his money-making trade of which important consideration he could not have been
unaware as it was precisely the reason for his procuring the same.[32]
The same may be said of Manuel, a civil engineer and manager of a construction company. [33] He could be
expected to know that one must read every document, especially if it creates rights and obligations affecting him,
before signing the same. Manuel is not unschooled that the Court must come to his succor. It could reasonably be
expected that he would not trifle with something that would provide additional financial security to him and to his
wife in his twilight years.
Three. In a final attempt to defend her claim for benefits under Manuels pension plan, Lourdes points out that any
defect or insufficiency in the information provided by his pension plan application should be deemed waived after
the same has been approved, the policy has been issued, and the premiums have been collected. [34]
The Court cannot agree. The comprehensive pension plan that Philam Plans issued contains a one-year
incontestability period. It states:
VIII. INCONTESTABILITY
After this Agreement has remained in force for one (1) year, we can no longer contest for
health reasons any claim for insurance under this Agreement, except for the reason that
installment has not been 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 is reinstated afterwards, the one
(1) year contestability period shall start again on the date of approval of your request for
reinstatement.[35]
The above incontestability clause precludes the insurer from disowning liability under the policy it issued
on the ground of concealment or misrepresentation regarding the health of the insured after a year of its issuance.
Since Manuel died on the eleventh month following the issuance of his plan, [36] the one year incontestability
period has not yet set in. Consequently, Philam Plans was not barred from questioning Lourdes entitlement to the
benefits of her husbands pension plan.
WHEREFORE, the Court AFFIRMS in its entirety the decision of the Court of Appeals in CA-G.R. CV 87085 dated
December 18, 2007.
SO ORDERED.
G.R. No. 195872 March 12, 2014
FORTUNE MEDICARE, INC., Petitioner,

vs.
DAVID ROBERT U. AMORIN, Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, which challenges the Decision 2 dated
September 27, 2010 and Resolution3 dated February 24, 2011 of the Court of Appeals (CA) in CA-G.R. CV No.
87255.
The Facts
David Robert U. Amorin (Amorin) was a cardholder/member of Fortune Medicare, Inc. (Fortune Care), a
corporation engaged in providing health maintenance services to its members. The terms of Amorin's medical
coverage were provided in a Corporate Health Program Contract4 (Health Care Contract) which was executed on
January 6, 2000 by Fortune Care and the House of Representatives, where Amorin was a permanent employee.
While on vacation in Honolulu, Hawaii, United States of America (U.S.A.) in May 1999, Amorin underwent an
emergency surgery, specifically appendectomy, at the St. Francis Medical Center, causing him to incur professional
and hospitalization expenses of US$7,242.35 and US$1,777.79, respectively. He attempted to recover from
Fortune Care the full amount thereof upon his return to Manila, but the company merely approved a
reimbursement of ₱12,151.36, an amount that was based on the average cost of appendectomy, net of medicare
deduction, if the procedure were performed in an accredited hospital in Metro Manila. 5 Amorin received under
protest the approved amount, but asked for its adjustment to cover the total amount of professional fees which he
had paid, and eighty percent (80%) of the approved standard charges based on "American standard", considering
that the emergency procedure occurred in the U.S.A. To support his claim, Amorin cited Section 3, Article V on
Benefits and Coverages of the Health Care Contract, to wit:
A. EMERGENCY CARE IN ACCREDITED HOSPITAL. Whether as an in-patient or out-patient, the member

shall be entitled to full coverage under the benefits provisions of the Contract at any FortuneCare
accredited hospitals subject only to the pertinent provision of Article VII (Exclusions/Limitations) hereof.
For emergency care attended by non affiliated physician (MSU), the member shall be reimbursed 80% of
the professional fee which should have been paid, had the member been treated by an affiliated
physician. The availment of emergency care from an unaffiliated physician shall not invalidate or diminish
any claim if it shall be shown to have been reasonably impossible to obtain such emergency care from an
affiliated physician.
B. EMERGENCY CARE IN NON-ACCREDITED HOSPITAL
1. Whether as an in-patient or out-patient, FortuneCare shall reimburse the total hospitalization cost including the
professional fee (based on the total approved charges) to a member who receives emergency care in a non-
accredited hospital. The above coverage applies only to Emergency confinement within Philippine Territory.
However, if the emergency confinement occurs in a foreign territory, Fortune Care will be obligated to reimburse
or pay eighty (80%) percent of the approved standard charges which shall cover the hospitalization costs and
professional fees. x x x6
Still, Fortune Care denied Amorin’s request, prompting the latter to file a complaint 7 for breach of contract with
damages with the Regional Trial Court (RTC) of Makati City.
For its part, Fortune Care argued that the Health Care Contract did not cover hospitalization costs and professional
fees incurred in foreign countries, as the contract’s operation was confined to Philippine territory. 8 Further, it
argued that its liability to Amorin was extinguished upon the latter’s acceptance from the company of the amount
of ₱12,151.36.
The RTC Ruling
On May 8, 2006, the RTC of Makati, Branch 66 rendered its Decision 9 dismissing Amorin’s complaint. Citing Section
3, Article V of the Health Care Contract, the RTC explained:
Taking the contract as a whole, the Court is convinced that the parties intended to use the Philippine standard as
basis. Section 3 of the Corporate Health Care Program Contract provides that:
xxxx
On the basis of the clause providing for reimbursement equivalent to 80% of the professional fee which should
have been paid, had the member been treated by an affiliated physician, the Court concludes that the basis for
reimbursement shall be Philippine rates. That provision, taken with Article V of the health program contract, which
identifies affiliated hospitals as only those accredited clinics, hospitals and medical centers located "nationwide"
only point to the Philippine standard as basis for reimbursement.
The clause providing for reimbursement in case of emergency operation in a foreign territory equivalent to 80% of
the approved standard charges which shall cover hospitalization costs and professional fees, can only be
reasonably construed in connection with the preceding clause on professional fees to give meaning to a somewhat
vague clause. A particular clause should not be studied as a detached and isolated expression, but the whole and
every part of the contract must be considered in fixing the meaning of its parts. 10
In the absence of evidence to the contrary, the trial court considered the amount of ₱12,151.36 already paid by
Fortune Care to Amorin as equivalent to 80% of the hospitalization and professional fees payable to the latter had
he been treated in an affiliated hospital.11
Dissatisfied, Amorin appealed the RTC decision to the CA.
The CA Ruling
On September 27, 2010, the CA rendered its Decision12 granting the appeal. Thus, the dispositive portion of its
decision reads:
WHEREFORE, all the foregoing premises considered, the instant appeal is hereby GRANTED. The May 8, 2006
assailed Decision of the Regional Trial Court (RTC) of Makati City, Branch 66 is hereby REVERSED and SET ASIDE,
and a new one entered ordering Fortune Medicare, Inc. to reimburse [Amorin] 80% of the total amount of the
actual hospitalization expenses of $7,242.35 and professional fee of $1,777.79 paid by him to St. Francis Medical
Center pursuant to Section 3, Article V of the Corporate Health Care Program Contract, or their peso equivalent at
the time the amounts became due, less the [P]12,151.36 already paid by Fortunecare.
SO ORDERED.13
In so ruling, the appellate court pointed out that, first, health care agreements such as the subject Health Care
Contract, being like insurance contracts, must be liberally construed in favor of the subscriber. In case its
provisions are doubtful or reasonably susceptible of two interpretations, the construction conferring coverage is to
be adopted and exclusionary clauses of doubtful import should be strictly construed against the
provider.14 Second, the CA explained that there was nothing under Article V of the Health Care Contract which
provided that the Philippine standard should be used even in the event of an emergency confinement in a foreign
territory.15
Fortune Care’s motion for reconsideration was denied in a Resolution 16 dated February 24, 2011. Hence, the filing
of the present petition for review on certiorari.
The Present Petition
Fortune Care cites the following grounds to support its petition:
I. The CA gravely erred in concluding that the phrase "approved standard charges" is subject to
interpretation, and that it did not automatically mean "Philippine Standard"; and
II. The CA gravely erred in denying Fortune Care’s motion for reconsideration, which in effect affirmed its
decision that the American Standard Cost shall be applied in the payment of medical and hospitalization
expenses and professional fees incurred by the respondent. 17
The Court’s Ruling
The petition is bereft of merit.
The Court finds no cogent reason to disturb the CA’s finding that Fortune Care’s liability to Amorin under the
subject Health Care Contract should be based on the expenses for hospital and professional fees which he actually
incurred, and should not be limited by the amount that he would have incurred had his emergency treatment been
performed in an accredited hospital in the Philippines.
We emphasize that for purposes of determining the liability of a health care provider to its members,
jurisprudence holds that a health care agreement is in the nature of non-life insurance, which is primarily a
contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury
or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under
the contract.18
To aid in the interpretation of health care agreements, the Court laid down the following guidelines in Philamcare
Health Systems v. CA19:
When the terms of insurance contract contain limitations on liability, courts should construe them in such a way as
to preclude the insurer from non-compliance with his obligation. Being a contract of adhesion, the terms of an
insurance contract are to be construed strictly against the party which prepared the contract – the insurer. By
reason of the exclusive control of the insurance company over the terms and phraseology of the insurance
contract, ambiguity must be strictly interpreted against the insurer and liberally in favor of the insured, especially
to avoid forfeiture. This is equally applicable to Health Care Agreements. The phraseology used in medical or
hospital service contracts, such as the one at bar, must be liberally construed in favor of the subscriber, and if
doubtful or reasonably susceptible of two interpretations the construction conferring coverage is to be adopted,
and exclusionary clauses of doubtful import should be strictly construed against the provider. 20 (Citations omitted
and emphasis ours)
Consistent with the foregoing, we reiterated in Blue Cross Health Care, Inc. v. Spouses Olivares 21:
In Philamcare Health Systems, Inc. v. CA, we ruled that a health care agreement is in the nature of a non-life
insurance. It is an established rule in insurance contracts that when their terms contain limitations on liability, they
should be construed strictly against the insurer. These are contracts of adhesion the terms of which must be
interpreted and enforced stringently against the insurer which prepared the contract. This doctrine is equally
applicable to health care agreements.
xxxx
x x x [L]imitations of liability on the part of the insurer or health care provider must be construed in such a way as
to preclude it from evading its obligations. Accordingly, they should be scrutinized by the courts with "extreme
jealousy" and "care" and with a "jaundiced eye." x x x.22 (Citations omitted and emphasis supplied)
In the instant case, the extent of Fortune Care’s liability to Amorin under the attendant circumstances was
governed by Section 3(B), Article V of the subject Health Care Contract, considering that the appendectomy which
the member had to undergo qualified as an emergency care, but the treatment was performed at St. Francis
Medical Center in Honolulu, Hawaii, U.S.A., a non-accredited hospital. We restate the pertinent portions of Section
3(B):
B. EMERGENCY CARE IN NON-ACCREDITED HOSPITAL
1. Whether as an in-patient or out-patient, FortuneCare shall reimburse the total hospitalization cost including the
accredited hospital. The above coverage applies only to Emergency confinement within Philippine Territory.
However, if the emergency confinement occurs in foreign territory, Fortune Care will be obligated to reimburse or
pay eighty (80%) percent of the approved standard charges which shall cover the hospitalization costs and
professional fees. x x x23 (Emphasis supplied)
The point of dispute now concerns the proper interpretation of the phrase "approved standard charges", which
shall be the base for the allowable 80% benefit. The trial court ruled that the phrase should be interpreted in light
of the provisions of Section 3(A), i.e., to the extent that may be allowed for treatments performed by accredited
physicians in accredited hospitals. As the appellate court however held, this must be interpreted in its literal sense,
guided by the rule that any ambiguity shall be strictly construed against Fortune Care, and liberally in favor of
Amorin.
The Court agrees with the CA. As may be gleaned from the Health Care Contract, the parties thereto contemplated
the possibility of emergency care in a foreign country. As the contract recognized Fortune Care’s liability for
emergency treatments even in foreign territories, it expressly limited its liability only insofar as the percentage of
hospitalization and professional fees that must be paid or reimbursed was concerned, pegged at a mere 80% of the
approved standard charges.
The word "standard" as used in the cited stipulation was vague and ambiguous, as it could be susceptible of
different meanings. Plainly, the term "standard charges" could be read as referring to the "hospitalization costs
and professional fees" which were specifically cited as compensable even when incurred in a foreign country.
Contrary to Fortune Care’s argument, from nowhere in the Health Care Contract could it be reasonably deduced
that these "standard charges" referred to the "Philippine standard", or that cost which would have been incurred if
the medical services were performed in an accredited hospital situated in the Philippines. The RTC ruling that the
use of the "Philippine standard" could be inferred from the provisions of Section 3(A), which covered emergency
care in an accredited hospital, was misplaced. Evidently, the parties to the Health Care Contract made a clear
distinction between emergency care in an accredited hospital, and that obtained from a non-accredited
hospital.1âwphi1 The limitation on payment based on "Philippine standard" for services of accredited physicians
was expressly made applicable only in the case of an emergency care in an accredited hospital.
The proper interpretation of the phrase "standard charges" could instead be correlated with and reasonably
inferred from the other provisions of Section 3(B), considering that Amorin’s case fell under the second case, i.e.,
emergency care in a non-accredited hospital. Rather than a determination of Philippine or American standards, the
first part of the provision speaks of the full reimbursement of "the total hospitalization cost including the
accredited hospital" within the Philippines. Thus, for emergency care in non-accredited hospitals, this cited clause
declared the standard in the determination of the amount to be paid, without any reference to and regardless of
the amounts that would have been payable if the treatment was done by an affiliated physician or in an affiliated
hospital. For treatments in foreign territories, the only qualification was only as to the percentage, or 80% of that
payable for treatments performed in non-accredited hospital.
All told, in the absence of any qualifying word that clearly limited Fortune Care's liability to costs that are
applicable in the Philippines, the amount payable by Fortune Care should not be limited to the cost of treatment in
the Philippines, as to do so would result in the clear disadvantage of its member. If, as Fortune Care argued, the
premium and other charges in the Health Care Contract were merely computed on assumption and risk under
Philippine cost and, that the American cost standard or any foreign country's cost was never considered, such
limitations should have been distinctly specified and clearly reflected in the extent of coverage which the company
voluntarily assumed. This was what Fortune Care found appropriate when in its new health care agreement with
the House of Representatives, particularly in their 2006 agreement, the provision on emergency care in non-
accredited hospitals was modified to read as follows:
However, if the emergency confinement occurs in a foreign territory, Fortunecare will be obligated to reimburse or
pay one hundred (100%) percent under approved Philippine Standard covered charges for hospitalization costs
and professional fees but not to exceed maximum allowable coverage, payable in pesos at prevailing currency
exchange rate at the time of availment in said territory where he/she is confined. x x x 24
Settled is the rule that ambiguities in a contract are interpreted against the party that caused the ambiguity. "Any
ambiguity in a contract whose terms are susceptible of different interpretations must be read against the party
who drafted it."25
WHEREFORE, the petition is DENIED. The Decision dated September 27, 2010 and Resolution dated February 24,
2011 of the Court of Appeals in CA-G.R. CV No. 87255 are AFFIRMED.
SO ORDERED.
G.R. No. 105135 June 22, 1995
SUNLIFE ASSURANCE COMPANY OF CANADA, petitioner,

vs.
The Hon. COURT OF APPEALS and Spouses ROLANDO and BERNARDA BACANI, respondents.
QUIASON, J.:
This is a petition for review for certiorari under Rule 45 of the Revised Rules of Court to reverse and set aside the
Decision dated February 21, 1992 of the Court of Appeals in CA-G.R. CV No. 29068, and its Resolution dated April
22, 1992, denying reconsideration thereof.
We grant the petition.
On April 15, 1986, Robert John B. Bacani procured a life insurance contract for himself from petitioner. He was
issued Policy No. 3-903-766-X valued at P100,000.00, with double indemnity in case of accidental death. The
designated beneficiary was his mother, respondent Bernarda Bacani.
On June 26, 1987, the insured died in a plane crash. Respondent Bernarda Bacani filed a claim with petitioner,
seeking the benefits of the insurance policy taken by her son. Petitioner conducted an investigation and its findings
prompted it to reject the claim.
In its letter, petitioner informed respondent Bernarda Bacani, that the insured did not disclose material facts
relevant to the issuance of the policy, thus rendering the contract of insurance voidable. A check representing the
total premiums paid in the amount of P10,172.00 was attached to said letter.
Petitioner claimed that the insured gave false statements in his application when he answered the following
questions:
5. Within the past 5 years have you:
a) consulted any doctor or other health practitioner?
b) submitted to:
EGG?
X-rays?
blood tests?
other tests?
c) attended or been admitted to any hospital or other medical facility?
6. Have you ever had or sought advice for:
xxx xxx xxx
b) urine, kidney or bladder disorder? (Rollo, p. 53)
The deceased answered question No. 5(a) in the affirmative but limited his answer to a consultation with a certain
Dr. Reinaldo D. Raymundo of the Chinese General Hospital on February 1986, for cough and flu complications. The
other questions were answered in the negative (Rollo, p. 53).
Petitioner discovered that two weeks prior to his application for insurance, the insured was examined and
confined at the Lung Center of the Philippines, where he was diagnosed for renal failure. During his confinement,
the deceased was subjected to urinalysis, ultra-sonography and hematology tests.
On November 17, 1988, respondent Bernarda Bacani and her husband, respondent Rolando Bacani, filed an action
for specific performance against petitioner with the Regional Trial Court, Branch 191, Valenzuela, Metro Manila.
Petitioner filed its answer with counterclaim and a list of exhibits consisting of medical records furnished by the
Lung Center of the Philippines.
On January 14, 1990, private respondents filed a "Proposed Stipulation with Prayer for Summary Judgment" where
they manifested that they "have no evidence to refute the documentary evidence of
concealment/misrepresentation by the decedent of his health condition (Rollo, p. 62).
Petitioner filed its Request for Admissions relative to the authenticity and due execution of several documents as
well as allegations regarding the health of the insured. Private respondents failed to oppose said request or reply
thereto, thereby rendering an admission of the matters alleged.
Petitioner then moved for a summary judgment and the trial court decided in favor of private respondents. The
dispositive portion of the decision is reproduced as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant,
condemning the latter to pay the former the amount of One Hundred Thousand Pesos
(P100,000.00) the face value of insured's Insurance Policy No. 3903766, and the Accidental Death
Benefit in the amount of One Hundred Thousand Pesos (P100,000.00) and further sum of
P5,000.00 in the concept of reasonable attorney's fees and costs of suit.
Defendant's counterclaim is hereby Dismissed (Rollo, pp. 43-44).
In ruling for private respondents, the trial court concluded that the facts concealed by the insured were made in
good faith and under a belief that they need not be disclosed. Moreover, it held that the health history of the
insured was immaterial since the insurance policy was "non-medical".
Petitioner appealed to the Court of Appeals, which affirmed the decision of the trial court. The appellate court
ruled that petitioner cannot avoid its obligation by claiming concealment because the cause of death was
unrelated to the facts concealed by the insured. It also sustained the finding of the trial court that matters relating
to the health history of the insured were irrelevant since petitioner waived the medical examination prior to the
approval and issuance of the insurance policy. Moreover, the appellate court agreed with the trial court that the
policy was "non-medical" (Rollo, pp. 4-5).
Petitioner's motion for reconsideration was denied; hence, this petition.
II
We reverse the decision of the Court of Appeals.
The rule that factual findings of the lower court and the appellate court are binding on this Court is not absolute
and admits of exceptions, such as when the judgment is based on a misappreciation of the facts (Geronimo v.
Court of Appeals, 224 SCRA 494 [1993]).
In weighing the evidence presented, the trial court concluded that indeed there was concealment and
misrepresentation, however, the same was made in "good faith" and the facts concealed or misrepresented were
irrelevant since the policy was "non-medical". We disagree.
Section 26 of The Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the
other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no
warranty, and which the other has no means of ascertaining. Said Section provides:
A neglect to communicate that which a party knows and ought to communicate, is called
concealment.
Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts
upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed
contract or in making his inquiries (The Insurance Code, Sec. 31).
The terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to
his health.
The information which the insured failed to disclose were material and relevant to the approval and issuance of
the insurance policy. The matters concealed would have definitely affected petitioner's action on his application,
either by approving it with the corresponding adjustment for a higher premium or rejecting the same. Moreover, a
disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably
assess the risk involved in accepting the application.
In Vda. de Canilang v. Court of Appeals, 223 SCRA 443 (1993), we held that materiality of the information withheld
does not depend on the state of mind of the insured. Neither does it depend on the actual or physical events
which ensue.
Thus, "goad faith" is no defense in concealment. The insured's failure to disclose the fact that he was hospitalized
for two weeks prior to filing his application for insurance, raises grave doubts about his bonafides. It appears that
such concealment was deliberate on his part.
The argument, that petitioner's waiver of the medical examination of the insured debunks the materiality of the
facts concealed, is untenable. We reiterate our ruling in Saturnino v. Philippine American Life Insurance Company, 7
SCRA 316 (1963), that " . . . the waiver of a medical examination [in a non-medical insurance contract] renders
even more material the information required of the applicant concerning previous condition of health and diseases
suffered, for such information necessarily constitutes an important factor which the insurer takes into
consideration in deciding whether to issue the policy or not . . . "
Moreover, such argument of private respondents would make Section 27 of the Insurance Code, which allows the
injured party to rescind a contract of insurance where there is concealment, ineffective (See Vda. de Canilang v.
Court of Appeals, supra).
Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled
that the insured need not die of the disease he had failed to disclose to the insurer. It is sufficient that his non-
disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making
inquiries (Henson v. The Philippine American Life Insurance Co., 56 O.G. No. 48 [1960]).
We, therefore, rule that petitioner properly exercised its right to rescind the contract of insurance by reason of the
concealment employed by the insured. It must be emphasized that rescission was exercised within the two-year
contestability period as recognized in Section 48 of The Insurance Code.
WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals is REVERSED and SET ASIDE.
SO ORDERED.

Cases - Part 10 - Devices To Ascertain and Control Risk and Loss

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INSUARNCE LAW_PART X_DEVICES TO ASCERTAIN AND CONTROL RISK AND LOSS

G.R. No. 195176

THE INSULAR LIFE ASSURANCE COMPANY, LTD., Petitioner,

DEL CASTILLO, J.:

1. The EXTRA PREMIUM is imposed; and

Immediate cause: a. End stage renal failure, Hepatic failure

Antecedent cause: b. Congestive heart failure, Diffuse myocardial ischemia.

Underlying cause: c. Diabetes Neuropathy, Alcoholism, and Pneumonia. 12

Ruling of the Regional Trial Court (RTC)

Ruling of the Court of Appeals

We deny the Petition.

The Insurance Code pertinently provides that:

Place: Cag. De [O]ro City

The Insular Life Assurance Co., Ltd.

Policy No. A000015683

Very truly yours,

Felipe N. Khu, Sr.

1. The EXTRA PREMIUM is imposed; and

Cagayan de Oro City, 07 January 2000.

(Signed) Authorized Signature

The CA expounded on this point thus –

G.R. No. 175666 July 29, 2013

MANILA BANKERS LIFE INSURANCE CORPORATION, Petitioner.

DEL CASTILLO, J.:

2. Sotero was sickly since 1990;

Ruling of the Regional Trial Court

Ruling of the Court of Appeals

Petitioner raises the following issues for resolution:

The Court denies the Petition.

.R. No. 204736, November 28, 2016

MANULIFE PHILIPPINES, INC.,1 Petitioners, v. HERMENEGILDA YBAÑEZ, Respondent.

DEL CASTILLO, J.:

In her Answer, Hermenegilda countered that:

3) [The insured's] history of Leptospirosis in 2000. (This is not confirmed)

- on June 2002 at CDH, Cebu City

= Cardiac clearance for surgery

= Cholecystectomy done [J]une 7[,] 2002 by Dr. Ang

= Biopsy: Gallbladder Chronic Calculous Cholecystitis

Ruling of the Regional Trial Court

After due proceedings, the RTC dismissed Manulife's Complaint, thus:

Ruling of the Court of Appeals

G.R. No. 198174 September 2, 2013

ALPHA INSURANCE AND SURETY CO., PETITIONER,

The facts follow.

1.) The Company shall not be liable for:

To pay attorney’s fees in the sum of ₱65,000.00; and

To pay the costs of suit.

Aggrieved, petitioner filed an appeal with the CA.

We rule in the negative.

Significant portions of Section III of the Insurance Policy states:

SECTION III – LOSS OR DAMAGE

by accidental collision or overturning, or collision or overturning consequent upon mechanical breakdown or

by fire, external explosion, self-ignition or lightning or burglary, housebreaking or theft;

EXCEPTIONS TO SECTION III

The Company shall not be liable to pay for:

MA. LOURDES S. FLORENDO, G.R. No. 186983

The Facts and the Case

The issues presented in this case are:

Rulings of the Court

(d) I am in good health and physical condition.

Date of confinement : ____________________________

APPLICATION FOR PENSION PLAN

DECLARATIONS AND REPRESENTATIONS