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1|Insurance Law Case Digest #15: Concealment

15. G.R. No. 113899 October 13, 1999GREAT PACIFIC LIFE ASSURANCE
CORP., petitioner,

A contract of group life insurance was executed between petitioner and DBP,
wherein petitioner agreed to insure the lives of eligible housing loan mortgagors of
DBP. Dr. Wilfredo Leuterio, physician and housing debtor of DBP applied for
membership in the group life insurance plan on November 11, 1983. In
accomplishing the form, Dr. Leuterio answered NO to the question “Have you ever
had, or consulted, a physician for a heart condition, high blood pressure, cancer,
diabetes, lung, kidney or stomach disorder or any other physical impairment?”, and
YES to the question” Are you now, to the best of your knowledge, in good health”.
On November 15, 1983, petitioner issued a certificate as insurance coverage of Dr.
Leuterio to the extent of his DBP mortgage indebtedness amounting to Php 86k.

He died on August 6, 1984 due to massive cerebral hemorrhage. DBP submitted a

death claim to petitioner, but petitioner denied it, alleging that the deceased was not
physically healthy upon application for insurance, and that he did not disclose that
he had hypertension which caused his death. Petitioner contends that such non-
disclosure constituted concealment, justifying the denial of the claim.

On October 20, 1986, Respondent Medarda v. Leuterio, widow of Dr. Leuterio, filed
a complaint with the RTC of Misamis Oriental against petitioner for Specific
Performance with damages. Dr. Mejias, who issued the death certificate, testified
that the deceased complained of headaches presumably due to high blood pressure,
but such was not conclusive as the deceased was not autopsied; other causes were
not ruled out. The trial court ruled in favor of the respondent widow, the CA
sustained the trial court’s decision hence the present petition.

ISSUE/S: WON the CA erred in not finding that Dr. Leuterio concealed that he had

RULING: NO. Concealment exists where the assured had knowledge of a fact
material to the risk and honesty, good faith, and fair dealing requires that he should
communicate it to the assured, but he designedly and intentionally withholds the

Petitioner’s contention does not hold water as it merely relied on the testimony of
the attending physician Dr. Mejias, supported by the info given by the widow.

Such medical findings were inconclusive as Dr. Mejia did not conduct an autopsy
on the body of the decedent. Dr. Mejia’s statement was considered as hearsay.

Contrary to petitioner’s allegations, there was no sufficient proof that the insured
had suffered from hypertension. Failing to establish concealment of the part of the
insured, petitioner cannot refuse payment of the claim.

The fraudulent intent on the part of the insured must be established to entitle the
insurer to rescind the contract. Misrepresentation as a defense of the insurer to
avoid liability is an affirmative defense and the duty to establish such defense by
satisfactory and convincing evidence rests upon the insurer. In the case at bar, the
petitioner failed to clearly and satisfactorily establish its defense, and is therefore
liable to pay the proceeds of the insurance.