G.R. No. 198799 - Bank of the Philippine Islands vs. Mendoza

On April 4, 1989, Ofelia Brucal, together with her daughter Donna Brucal, brought an action against Insular Life Assurance Co., Ltd. (Insular Life) to recover the proceeds of an insurance policy covering the life of Horacio Aquino, who was stated to be the brother of Ofelia Brucal.
Insular Life, in its answer, contended that the insurance policy was a nullity due to gross misrepresentation and material concealment in its procurement.
Insular Life further contended that, even assuming the policy to be valid, the death of the insured was not accidental but deliberate, thereby precluding recovery under the terms of the policy.

Before pre-trial, Insular Life filed a motion for leave to file a third-party complaint against Ricardo Brucal, described as Ofelia Brucal’s husband and an insurance underwriter of Philam Life Insurance.
Insular Life asserted that Ricardo Brucal forged, or caused to be forged, the signature of Horacio Aquino on the application for insurance coverage.
The trial court granted the motion for leave to file the third-party complaint.
Ricardo Brucal filed his answer.
The parties submitted their respective pre-trial briefs.

Discovery efforts: request for admission, written interrogatories, and motion to produce documents

During the course of the proceedings, Insular Life sent private respondents a request for admission along with a set of written interrogatories.
Insular Life also filed a motion asking the trial court to direct private respondents to produce six (6) other alleged insurance policies, as well as other related papers, covering the life of Horacio Aquino, and to allow inspection of the site where Aquino died.
On February 16, 1990, the trial court directed counsel for private respondents to comment.
In their manifestation dated March 2, 1990, private respondents asserted that Insular Life’s request was designed to delay the proceedings and constituted a fishing expedition.
On March 13, 1990, the trial court denied the request for production of the documents, but it ruled on the written interrogatories as follows:

The court noted that Ricardo Brucal and the plaintiffs objected through a manifestation received by the court on March 2, 1990.
The objection was anchored on immateriality, impertinency, and irrelevancy.
The court ruled that the plaintiffs and third-party defendant must answer the interrogatories within ten (10) days from receipt of the order.

Trial dates, Insular Life’s motion for dismissal and default, and denial by the trial court

On June 13, 1990, during the scheduled initial presentation of evidence by private respondents, they still had not provided any answer to the written interrogatories.
On June 20, 1990, Insular Life filed a motion to dismiss the complaint and to declare Rodolfo Brucal (as stated in the motion) in default on the third-party complaint.
Private respondents opposed the motion, arguing that the modes of discovery should not be utilized in a manner that would permit unrestrained fishing expeditions.
In an order dated July 5, 1990, the trial court denied Insular Life’s motion.

The trial court held that substantial justice would be served better if the case were decided on the merits.

The trial court reiterated the denial in its order dated July 31, 1990, and rescheduled the hearing to give Insular Life ample time to elevate the matter to the higher courts to secure a ruling.
On October 1, 1990, Insular Life file...(Subscriber-Only)

Whether the trial court and the Court of Appeals committed grave abuse of discretion by refusing to apply the sanctions under Rule 29, Section 5 despite private respondents’ failure to answer written interrogatories.

Whether private respondents’ refusal or failure to answer the written interrogatories warranted striking out pleadings, dismissal of the action or entering judgment by default under Rule 29, Section 5.
Whether the trial court’s choice to decide the case on the merits, rather than impose discovery sanctions, constituted grave abuse of discretion.
Whether the Court of Appeals properly sustained the trial court’s exercise of discretion.