BASILIA BERDIN VDA CONSUEGRA; JULIANA, PACITA, MARIA LOURDES, JOSE, RODRIGO, LINEDA

AND LUIS, ALL SURNAMED CONSUEGRA VS. GSIS, COMMISSIONER OF PUBLIC HIGHWAYS,
HIGHWAYS DISTRICT ENGINEER OF SURIGAO DEL NORTE, COMMISSIONER OF CIVIL SERVICE, AND
ROSARIO DIAZ

FACTS OF THE CASE: Jose Consuegra contracted two marriages, the first to respondent Rosario Diaz, out of
which 2 children were born but both predeceased their father, the second marriage is with herein petitioner
Basilia Berdin, wherein out of which 7 children were born.

The late Jose Consuegra was a foreman in the office of the District Engineer in the province of Surigao
del Norte. He was a member of the Government Service Insurance System (GSIS) when he died on
September 26, 1965, wherein the proceeds of his life insurance were paid by the GSIS to petitioner Basilia
Berdin and her children who were the beneficiaries named in the policy. Having been in the service of the
government for more than 22 years, Consuegra was entitled to retirement benefits in the sum of P6,304.47,
however he did not designate any beneficiary who would receive the retirement insurance benefits.

Respondent Rosario, filed a claim with the GSIS asking that the retirement insurance benefits be paid
to her as the only legal heir of Consuegra. On the other hand, petitioners likewise, filed a similar claim with the
GSIS, asserting that being the beneficiaries named in the life insurance policy of Consuegra, they are the only
ones entitled to receive the retirement benefits due to Jose Consuegra.

GSIS ruled that the legal heirs of the late Cansuegra were his widow Rosario who is entitled to ½ of the
retirement insurance benefits, on the one hand; and Basilia Berdin and her children be entitled to the remaining
one-half. The said ruling was affirmed by the Court of First Instance ruling that when two women innocently
and in good faith are legally united in holy matrimony to the same man, they and their children, born of said
wedlock, will be regarded as legitimate children and each family be entitled to one half of the estate.

ISSUE TO BE RESOLVED: WON BENEFICIARIES NAMED IN THE LIFE INSURANCE POLICY BE THE
DESIGNATED BENEFICIARY IN THE RETIREMENT INSURANCE BENEFITS OF THE DECEASED;

RULING OF THE COURT: NO, The beneficiaries named in the life insurance policy cannot be automatically
designated as beneficiary in the retirement insurance benefits of the deceased.

GSIS offers two separate and distinct systems of benefits to its members; one being the life insurance
and the other is the retirement insurance. These two distinct systems of benefits are paid out from two distinct
and separate funds that are maintained by GSIS.

In the case of the proceeds of a life insurance, the same are paid to whoever is named the beneficiary
in the life insurance policy. As in the case of a life insurance provided for in the Insurance Act, the beneficiary
in a life insurance under the GSIS may not necessarily be a heir of the insured. The insured in a life insurance
may designate any person as beneficiary unless disqualified to be so under the provisions of the Civil
Code. And in the absence of any beneficiary named in the life insurance policy, the proceeds of the insurance
will go to the estate of the insured.

Retirement insurance, on the other hand, is primarily intended for the benefit of the employee — to
provide for his old age, or incapacity, after rendering service in the government for a required number of years.
If the employee reaches the age of retirement, he gets the retirement benefits even to the exclusion of the
beneficiary or beneficiaries named in his application for retirement insurance. The beneficiary of the retirement
insurance can only claim the proceeds of the retirement insurance if the employee dies before retirement. If the
employee failed or overlooked to state the beneficiary of his retirement insurance, the retirement benefits will
accrue to his estate and will be given to his legal heirs in accordance with law, as in the case of a life insurance
if no beneficiary is named in the insurance policy.

Hence, GSIS had correctly acted when it ruled that the proceeds of the retirement insurance of the late
Jose Consuegra should be divided equally between his first living wife Rosario Diaz, on the one hand, and his
second wife Basilia Berdin and his children by her, on the other.
 THE INSULAR ASSURANCE CO., LTD. VS. THE HEIRS OF JOSE H. ALVAREZ

G.R. NO. 207526; OCTOBER 3, 2018

FACTS OF THE CASE: Jose Alvarez and his wife, Adelina, owned a residential lot in Caloocan City, wherein
the said lot was mortgaged to Unionbank in the amount of P648,000.00 when Jose Alvarez applied for a
housing loan. Further, a mortgage redemption insurance, with herein petitioner Insular Life, was taken on the
life of Alvarez with UnionBank as beneficiary for added security.

A year after, Jose Alvarez died and thereafter Union Bank filed with Insular Life a death claim under
Alvarez’s name pursuant to the Mortgage Redemption Insurance.

Insular life denied the claim after determining that Alvarez was not eligible for coverage as he was
supposedly more than 60 years old at the time of his loan’s approval.

With such refusal, the monthly amortizations of the loan stood unpaid, hence Unionbank foreclosed the
lot and sold it at public auction.

Later, the Heirs of Alvarez filed a complaint for Declaration of Nullity of Contract and Damages against
UnionBank denying knowledge of any loan obtained by Alvarez, and further demanding Insular Life to fulfill its
obligation as an insurer under the Group Mortgage Redemption Insurance.

The Regional Trial Court ruled in favor of the Heirs. It found no indication that Alvarez had any
fraudulent intent when he gave UnionBank information about his age and date of birth. It explained that
UnionBank initiated and negotiated the Group Mortgage Redemption Insurance with Insular Life, and that
"ordinary customers will not know about [insurance policies such as this] unless it is brought to their knowledge
by the bank. It noted that if UnionBank's personnel were mindful of their duties and if Alvarez appeared to be
disqualified for the insurance, they should have immediately informed him of his disqualification. It emphasized
that in evaluating Alvarez's worthiness for the loan, UnionBank had been in possession of materials sufficient
to inform itself of Alvarez's personal circumstances. It added that if Insular Life had any doubt on the
information that UnionBank had provided, it should have inquired further instead of relying solely on the
information readily available to it and immediately refusing to pay.

ISSUES TO BE RESOLVED:

1. WON THE INSULAR LIFE ASSURANCE CO., LTD IS OBLIGED TO PAY UNIONBANK OF THE
PHILIPPINES THE BALANCE OF JOSE ALVAREZ’S LOAN GIVEN THE CLAIM THAT HE LIED
ABOUT HIS AGE AT THE TIME OF THE APPROVAL OF HIS LOAN;
2. WON UNION BANK WAS CORRECT IN PROCEEDING WITH THE FORECLOSURE FOLLOWING
INSULAR LIFE REFUSAL TO PAY;

RULING OF THE COURT:

1. Yes, Life Assurance is obliged to pay Unionbank the balance of Jose Alvarez’s loan, as correctly
observed by the Court of Appeals; it was Insular Life’s burden to establish the merits of its own case. A
single piece of evidence hardly qualifies as clear and convincing. Its contents could just as easily have
been an isolated mistake. The most basic document that Alvarez accomplished in relation to Insular Life
must have been an insurance application form. Strangely, Insular Life failed to adduce even this document
—a piece of evidence that was not only commonsensical, but also one which has always been in its
possession and disposal.

` The Insurance Code dispenses with proof of fraudulent intent in cases of rescission due to
concealment, but not so in cases of rescission due to false representations. When an abundance of
available documentary evidence can be referenced to demonstrate a design to defraud, presenting a
singular document with an erroneous entry does not qualify as clear and convincing proof of fraudulent
intent. Neither does belatedly invoking just one other document, which was not even authored by the
alleged miscreant. The Insurance Code dispenses with proof of fraudulent intent in cases of rescission due
to concealment, but not so in cases of rescission due to false representations. When an abundance of
available documentary evidence can be referenced to demonstrate a design to defraud, presenting a
singular document with an erroneous entry does not qualify as clear and convincing proof of fraudulent
intent. Neither does belatedly invoking just one other document, which was not even authored by the
alleged miscreant.
2. No, Union bank erred in proceeding to foreclose the property of Jose Alvarez due to Insular Life’s
refusal to pay. It cannot be allowed to foreclose the property as in the first place, it was the one who
endorsed the mortgage redemption insurance to Insular Life. As the one who is fully aware of the
considerations that could have disqualified Alvarez, due to his age, it nevertheless acted as though
nothing was irregular. Yet, when confronted with Insular Life’s challenge, it readily abandoned the stance
that it had earlier maintained and capitulated to Insular Life’s assertion of fraud.
 MANULIFE PHILIPPINES, INC. VS. HERMENEGILDA YBANEZ

G.R. NO. 204736; NOVEMBER 28, 2016

FACTS OF THE CASE: Manulife Insurance issued two (2) insurance policies to Dr. Gumersindo Ybanez,
wherein the herein respondent Hermenegilda Ybanez was its designated beneficiary. When the insured died,
and Mrs. Ybanez was claiming the proceeds of the policies, Manulife invoke that the policies were void due to
concealment or misrepresentation of material facts in the insurance policy application of Dr. Ybanez, based on
the fact that in the Death Certificate of the Dr. Yabanez, it stated that he had Hepatocellular CA, CRD Stage 4,
secondary to Uric Acid Nephropathy.

Manulife then instituted a complaint for Rescission of Insurance Contracts against Hermegenilda
Ybanez. However, The Regional Trial Court of Makati ruled against Manulife as it found that petitioner utterly
failed to prove that the insured had committed the alleged misrepresentation/s or concealment/s. The medical
records presented in the trial that could have established the insured’s misrepresentation/s or concealment/s
were inadmissible for being hearsay as Manulife did not present the physician or doctor, or any responsible
official of the hospital where those medical records came from. Thereby, it is evident that Manulife has ample
opportunity to verify and to inquire further into the insured’s medical history but it opted not to do; 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.

CA affirmed RTC’s decision. Hence, this petition.

ISSUE TO BE RESOLVED: WON MANULIFE’S COMPLAINT FOR RESCISSION OF INSURANCE

CONTRACTS FOR FAILURE TO PROVE CONCEALMENT ON THE PART OF THE INSURED
JUSTIFIABLE;

RULING OF THE COURT: YES, the dismissal of the petition for rescission of insurance contracts was
justifiable. The Court agrees with the lower courts in its findings that Manulife had utterly failed to prove that the
insured had committed the alleged misrepresentation/s or concealment/s of material facts imputed against him.
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.

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." For failure of
Manulife to prove intent to defraud on the part of the insured, it cannot validly sue for rescission of insurance
contracts.
 SUN LIFE OF CANADA (PHILIPPINES), INC. VS. MA. DAISY’S SIBYA, JESUS MANUEL S. SIBYA III,
JAIME LUIS SIBYA, AND THE ESTATE OF THE DECEASED ATTY. JESUS SIBYA, JR.

G.R. NO. 211212; JUNE 8, 2016

FACTS OF THE CASE: Atty. Jesus Sibya, Jr. Applied for life insurance with Sun Life. In his application for
Insurance, he indicated that he had sought advice for kidney problems. Sun Life, despite such information
approved Atty. Sibya’s application and issued an insurance policy.

On May 11, 2011, Atty. Sibya, Jr. Died as a result of a gunshot wound. As such, the wife of Atty. Sibya,
Daisy filed a claim with Sun Life to seek death benefits in his insurance policy, amounting to P1M. However,
Sun Life denied the claim on the ground that the details of Atty. Sibya’s medical history were not disclosed in
his application. Sun Life then tendered a check representing the refund of the premiums paid by Atty. Sibya.

Sun Life in refusing to pay respondents filed a complaint for rescission before the RTC, alleging Atty.
Sibya’s non disclosure in his insurance application of his previous medical treatment at the National Kidney
Transplant Institute. According to Sun Life, the undisclosed fact suggested that the insured was in “renal
failure and at a high risk medical condition. Consequently, had it known such fact, it would not have issued the
insurance policy.

RTC dismissed the petition for lack of merit and held that Atty. Sibya did not commit material
concealment and misrepresentation when he applied for life insurance with Sun life. On appeal, CA affirmed
the RTCs decision.

ISSUE TO BE RESOLVED: WON THERE WAS NO CONCEALMENT OR MISREPRESENTATION WHEN

ATTY. SIBYA SUBMITTED HIS INSURANCE APPLICATION WITH SUN LIFE;

RULING OF THE COURT: There is no concealment or misrepresentation, as the incontestability clause

already set in.

However, for the sake of argument, that the incontestability period has not yet set in the Court still
agree with the lower courts on its findings that Sun Life failed to show that Atty. Sibya committed concealment
and misrepresentation.

It was shown in the records that Atty. Sibya admitted that he had undergone medical treatment for
kidney ailment and that he authorized Sun Life to conduct investigation in reference with his medical history.

Indeed, the intent to defraud on the part of the insured must be ascertained to merit rescission of the
insurance contract. Concealment as a defense for the insurer to avoid liability is an affirmative defense and the
duty to establish such defense by satisfactory and convincing evidence rests upon the provider or insurer. 25 In
the present case, Sun Life failed to clearly and satisfactorily establish its allegations, and is therefore liable to
pay the proceeds of the insurance.
 JAIME GAISANO VS. DEVELOPMENT INSURANCE AND SURETY CORPORATION

G.R. NO. 190702L FEBRUARY 27, 2017

FACTS OF THE CASE: Peitioner Jaime Gaisano was the registered owner of a Mitsubishi Montero, while
respondent is a domestic corporation engaged in the insurance business. Respondent issued a
comprehensive commercial vehicle policy to petitioner in the amount of 1.5M over the vehicle mentioned for a
year.

Trans-Pacific Underwriters Agency, respondent’s agent, was the one tasked to collect the premiums
and charges on the policies. Petitioner’s company, Noah’s Ark immediately processed the payment for the
policy of Mr. Gaisano, however nobody from the Trans-Pacific picked up the check because its president and
general manager was celebrating his birthday. Trans-Pacific informed Noah’s Ark that its messenger would get
the check the next day, September 28.

On the evening of September 27, the vehicle was reported stolen and was not recovered. Oblivious of
the incident, Trans-Pacific picked up the check on September 28 and was deposited with the bank for
encashment. Thereafter, petitioner reported the loss and filed a claim with respondent for the insurance
proceeds. However, respondent denied petitioner’s claim on the claim that there was no insurance contract.

Petitioner filed a complaint for collection of sum of money and damages with RTC where it sought to
collect the insurance proceeds from respondent. Respondent asserted that the non-payment of the premium
rendered the policy ineffective.

RTC ruled in favor of petitioner, as it considered the premium paid as of September 27, the date of the
check. On appeal, CA reversed RTC’s decision ruling that the premium was not yet paid at the time of the loss
on September 27, but only a day after or on September 28, when the check was picked up by Trans-Pacific.

Hence, this petition.

ISSUE TO BE RESOLVED: WON THERE IS A BINDING CONTRACT BETWEEN PETITIONER AND

RESPONDENT

RULING OF THE COURT: There is no contract between the parties. The general rule in
insurance laws is that unless the premium is paid, the insurance policy is not valid and binding.

The exception are as follows:

(1) in case of life or industrial life policy, whenever the grace period provision applies, as
expressly provided by Section 77 itself;
(2) where the insurer acknowledged in the policy or contract of insurance itself the receipt of
premium, even if premium has not been actually paid, as expressly provided by Section 78 itself;
(3) where the parties agreed that premium payment shall be in installments and partial
payment has been made at the time of loss, as held in Makati Tuscany Condominium Corp. v. Court
of Appeals;
(4) where the insurer granted the insured a credit term for the payment of the premium, and
loss occurs before the expiration of the term, as held in Makati Tuscany Condominium Corp.; and
(5) where the insurer is in estoppel as when it has consistently granted a 60 to 90-day credit
term for the payment of premiums.

Even though respondent was informed that the check was ready for pick-up, the notice of the
availability of the check itself does not produce the effect of payment of the premium. Trans-Pacific
could not be considered in delay in accepting the check because when it informed petitioner that it will
only be able to pick-up the check the next day, petitioner did not protest to this, but instead allowed
Trans-Pacific to do so. Thus, at the time of loss, there was no payment of premium yet to make the
insurance policy effective. Further, the insurance policy in question does not fall under all the
exceptions mentioned above. Hence, petitioner is not entitled to the insurance proceeds because no
insurance policy became effective for lack of premium payment.

In an insurance contract, both the insured and insurer undertake risks. On one hand, there is
the insured, a member of a group exposed to a particular peril, who contributes premiums under the
risk of receiving nothing in return in case the contingency does not happen; on the other, there is the
insurer, who undertakes to pay the entire sum agreed upon in case the contingency happens. This
risk-distributing mechanism operates under a system where, by prompt payment of the premiums, the
insurer is able to meet its legal obligation to maintain a legal reserve fund needed to meet its
contingent obligations to the public. The premium, therefore, is the elixir vitae or source of life of the
insurance business: by law the insurer must maintain a legal reserve fund to meet its contingent
obligations to the public, hence, the imperative need for its prompt payment and full satisfaction. It
must be emphasized here that all actuarial calculations and various tabulations of probabilities of
losses under the risks insured against are based on the sound hypothesis of prompt payment of
premiums. Upon this bedrock insurance firms are enabled to offer the assurance of security to the
public at favorable rates.