G.R. No. 183272 - Sun Life of Canada , Inc. vs. Tan Kit

Norberto Tan Kit applied for a life insurance policy with Sun Life of Canada (Philippines), Inc. (“petitioner”) on October 28, 1999, with a face value of ₱300,000.00.
Norberto died on February 19, 2001, within the two-year contestability period specified in Section 48 of the Insurance Code.
Respondent Sandra Tan Kit, the widow and designated beneficiary, filed a claim under the policy.

Petitioner denied the claim on September 3, 2001, alleging material concealment in Norberto’s application, specifically on his smoking history. Norberto answered “No” to having smoked in the last 12 months, yet medical reports indicated he was a smoker who had only stopped in August 1999.
Petitioner argued that had accurate information been disclosed, the application would have been rejected. Thus, petitioner considered the policy null and void and tendered a refund of premiums amounting to ₱13,080.93.
Respondent Sandra Tan Kit refused the refund and insisted on the full insurance proceeds.

Petitioner filed a Complaint for Rescission before the RTC of Makati City on October 4, 2002.
The RTC ruled in favor of respondents on November 30, 2005, ordering petitioner to pay the full insurance amount (₱300,000.00) with interest at 6% per annum from the filing of the complaint. The RTC held that petitioner had cleared the concealment issue and that the medical report evidence was hearsay. It further ruled petitioner failed to comply with requirements for rescission under precedent (Philamcare Health Systems, Inc. v. Court of Appeals).
Petitioner’s motion for reconsideration was denied on February 15, 2006.
Petitioner appealed to the Court of Appeals (CA).

The CA reversed the RTC on October 17, 2007, ruling that Norberto was guilty of concealment. Thus, petitioner validly rescinded the insurance contract and was only liable to refund the premiums paid, plus 12% per annum interest from the time of Norberto’s death until payment.
The CA also held that the medical records were admitted by respondents’ failure to deny them pursuant to a Request for Admission under Rule 26.
Both parties filed motions for reconsideration; these were denied by the CA on June 12, 2008.
Only petitioner elevated the case to the Supreme Court via Petition for Review on Certiorari.

Whether petitioner Sun Life of Canada (Philippines), Inc. is liable to pay interest on the refunded premium amount.