Facts:

The case involves Sun Life of Canada (Philippines), Inc. as the petitioner and Ma. Daisy S. Sibya, Jesus Manuel S. Sibya III, Jaime Luis S. Sibya, and the Estate of the deceased Atty. Jesus Sibya, Jr. as the respondents. The events leading to the case began on January 10, 2001, when Atty. Jesus Sibya, Jr. applied for a life insurance policy with Sun Life. In his application, he disclosed a prior medical history, specifically mentioning that he had undergone lithotripsy for kidney stones in 1987. Sun Life approved the application on February 5, 2001, issuing Insurance Policy No. 031097335, which designated the respondents as beneficiaries entitled to a death benefit of P1,000,000.00 if Atty. Jesus Jr. died before February 5, 2021. Tragically, Atty. Jesus Jr. died from a gunshot wound on May 11, 2001. Following his death, Ma. Daisy filed a Claimant's Statement with Sun Life to claim the death benefits. However, Sun Life denied the claim on August 27, 2001, arguing that Atty...

Facts:

Insurance Application and Policy Issuance

• On January 10, 2001, Atty. Jesus Sibya, Jr. applied for life insurance with Sun Life of Canada (Philippines), Inc. (Sun Life). In his application, he disclosed that he had sought medical advice for kidney problems in 1987, specifically undergoing lithotripsy for kidney stones at the National Kidney Institute under Dr. Jesus Benjamin Mendoza. He stated there was no recurrence of the condition.
• On February 5, 2001, Sun Life approved the application and issued Insurance Policy No. 031097335, naming Ma. Daisy S. Sibya, Jesus Manuel S. Sibya III, and Jaime Luis S. Sibya as beneficiaries. The policy provided a death benefit of P1,000,000.00 if Atty. Jesus Jr. died before February 5, 2021.

Death of the Insured and Claim Denial

• On May 11, 2001, Atty. Jesus Jr. died from a gunshot wound in San Joaquin, Iloilo. Ma. Daisy filed a claim for the death benefits under the policy.
• On August 27, 2001, Sun Life denied the claim, alleging that Atty. Jesus Jr. failed to disclose his medical treatment at the National Kidney Transplant Institute in 1994, which indicated a high-risk medical condition. Sun Life refunded the premiums paid.

Legal Proceedings

• The respondents contested the denial, but Sun Life filed a Complaint for Rescission before the Regional Trial Court (RTC) of Makati City, seeking judicial confirmation of the rescission of the policy. Sun Life argued that had it known about the 1994 treatment, it would not have issued the policy.
• The respondents countered that Atty. Jesus Jr. acted in good faith, disclosed his 1987 treatment, and authorized Sun Life to investigate his medical history. They claimed Sun Life’s refusal to pay was a ploy to avoid its obligations.

Issue:

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Ruling:

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Ratio:

1. Incontestability Clause: Under Section 48 of the Insurance Code, an insurer has two years from the policy’s issuance to contest the policy based on concealment or misrepresentation. If the insured dies within this period, the insurer loses the right to rescind the policy.
2. No Fraudulent Intent: Atty. Jesus Jr. disclosed his 1987 treatment and signed an authorization allowing Sun Life to investigate his medical history. His statement of "no recurrence" was an honest opinion, not a misrepresentation.
3. Burden of Proof: The insurer must prove concealment or misrepresentation by clear and convincing evidence. Sun Life failed to meet this burden.
4. Finality of Factual Findings: The Supreme Court upheld the factual findings of the RTC and CA, as they were supported by substantial evidence.

Conclusion:

The Supreme Court ruled in favor of the respondents, affirming the CA’s decision that Sun Life must pay the death benefits, moral damages, exemplary damages, and attorney’s fees. The Court emphasized the importance of the incontestability clause and the insurer’s duty to investigate during the contestability period.