Case Summary (G.R. No. 186983)
Relevant Dates and Financial Terms
Application filed: October 23, 1997.
Pension Plan Agreement issued: October 30, 1997 (Pension Plan Agreement PP43005584).
Death of insured: September 15, 1998.
Regional Trial Court judgment in favor of petitioner: March 30, 2006.
Court of Appeals reversal: December 18, 2007.
Supreme Court decision affirming CA: February 22, 2012.
Plan price and values: pre-need price P997,050.00 (payable in 10 years); maturity value P2,890,000.00 after 20 years.
Structure and Effect of the Pension Plan
The comprehensive pension plan sold by Philam Plans included pension benefits and an automatic life insurance component provided under a Group Master Policy issued by Philam Life. The group policy: (a) automatically provided life insurance, including accidental death, to plan purchasers; (b) provided that if the plan holder died before maturity the beneficiary would receive proceeds equivalent to the pre-need price (the life-insurance proceeds); and (c) allowed the life insurance to cover unpaid premiums so that the beneficiary could still receive the maturity value at the plan’s maturity.
Facts on Application and Medical History
Manuel signed the application but left Perla (the soliciting agent) to supply the information required on the form; Ma. Celeste Abcede signed as sales counselor. The application contained explicit representations and declarations, including a statement that the applicant had never been treated for heart condition, diabetes, and other listed illnesses in the last five years, and an instruction to give details in provided spaces if any answers revealed otherwise. Manuel died within eleven months of issuance. Philam Life later determined Manuel had a pacemaker implanted previously, was on maintenance medication for a heart condition, and was being treated with insulin for diabetes.
Procedural History and Lower Courts’ Findings
Lourdes filed a claim for benefits which Philam Plans/Philam Life denied on grounds of concealment of material medical facts. Lourdes sued Philam Plans and the agents; the RTC found Manuel not guilty of concealment and ordered respondents jointly and severally to pay the insurance proceeds, the maturity benefit upon maturity, moral damages, and costs. The Court of Appeals reversed the RTC, holding that insurance contracts are contracts of utmost good faith requiring disclosure of material facts, and that Manuel had concealed material facts. The Supreme Court affirmed the Court of Appeals in its entirety.
Issue Framing on Appeal
The Supreme Court analyzed three principal issues: (1) whether Manuel concealed his medical conditions by leaving blank the relevant questions on the application; (2) whether Manuel is bound by any failure of the soliciting agent(s) to declare his true health condition (i.e., agency/imputed knowledge); and (3) whether Philam Plans’ approval of the application and acceptance of premiums precluded denial of the claim (i.e., whether insurer waived right to contest given issuance and premium collection).
On Concealment and the Applicant’s Representations
The Court emphasized that Manuel, by signing the application, adopted and certified the truth of its written representations and declarations. The application explicitly asked whether the applicant had been treated for certain conditions in the past five years and directed the applicant to fill in details if those statements were otherwise. By signing without completing those spaces, the Court treated the blanks as an implicit representation that the negative statements were true. Given medical facts later uncovered—ongoing treatment with Coumadin for venous thrombosis, insulin for diabetes, and the presence of a pacemaker—the Court concluded these were within the disclosure scope and that Manuel had concealed material information when he signed the application without disclosure.
On Agent-Filled Applications and Applicant’s Responsibility
The Court rejected the contention that Perla’s involvement insulated Manuel from responsibility. The application contained an express certification that the information was written by the applicant or under his direction. Even if Perla filled in the form, Manuel certified her action and thereby bound himself to the content. The Court reiterated that an applicant cannot sign and disown responsibility for untruthful or incomplete disclosures, particularly in insurance contracts where the insurer relies on applicant representations.
On Imputed Knowledge of the Agent
While the Court acknowledged the doctrine of imputed knowledge under Section 30 of the Insurance Code (i.e., knowledge of an agent imputed to the insurer), it observed that imputing Perla’s knowledge would not resolve all issues because it was not alleged or established that Perla knew of all of Manuel’s afflictions (specifically, the two conditions requiring medical treatment). Thus, the applicant’s own nondisclosure remained determinative.
On the Effect of the Pacemaker and Temporal Scope of Disclosure
Although the pacemaker had been implanted decades earlier, the Court explained that the continued presence of the pacemaker and continuing treatment for heart condition and diabetes amounted to ongoing medical conditions that fell withi
...continue readingCase Syllabus (G.R. No. 186983)
Case Citation, Court and Date
- G.R. No. 186983; Decision authored by Justice Abad, Third Division of the Supreme Court of the Philippines.
- Reported at 682 Phil. 582; Decision promulgated February 22, 2012.
- Justices Velasco, Jr. (Chairperson), Peralta, Mendoza, and Perlas-Bernabe concurred.
Parties
- Petitioner: Ma. Lourdes S. Florendo — beneficiary and widow of the insured, Manuel Florendo.
- Respondents: Philam Plans, Inc. (the pre-need/pension plan company); Perla Abcede (soliciting agent); Ma. Celeste Abcede (sales counselor who signed the application).
Nature of the Case
- Dispute over entitlement to benefits under a comprehensive pension plan that included a life insurance component.
- Central legal question: whether the insured, Manuel Florendo, concealed material facts regarding his health in his pension plan application, and the legal effect of such concealment on the life insurance portion of the plan.
Facts — Application, Plan and Premiums
- On October 23, 1997, Manuel Florendo filed an application for a comprehensive pension plan with Philam Plans after persuasion by Perla Abcede.
- The plan had a pre-need price of P997,050.00, payable in 10 years, and a maturity value of P2,890,000.00 after 20 years.
- Manuel signed the application and left to Perla the task of supplying the information needed in the application; Ma. Celeste Abcede signed as sales counselor.
- A Group Master Policy was issued by Philippine American Life Insurance Company (Philam Life) to Philam Plans to provide the life insurance coverage component automatically to those who signed up for the comprehensive pension plan.
- Under the Master Policy: if the plan holder died before maturity, the beneficiary was to receive the proceeds of the life insurance equivalent to the pre-need price; the life insurance would also take care of unpaid premiums until plan maturity, entitling the beneficiary to the maturity value.
- On October 30, 1997 Philam Plans issued Pension Plan Agreement PP43005584 to Manuel, naming Lourdes as beneficiary.
- Manuel paid his quarterly premiums.
Facts — Death, Claim and Insurer Investigation
- Manuel died on September 15, 1998, approximately eleven months after the application, of blood poisoning.
- Lourdes filed a claim with Philam Plans for benefits under the pension plan; because Manuel died before maturity and the insurance component governed payout, Philam Plans forwarded the claim to Philam Life.
- Philam Life, after investigation, found Manuel was on maintenance medicine for his heart, had an implanted pacemaker, suffered from diabetes mellitus, and was taking insulin.
- On May 3, 1999 Philam Plans wrote Lourdes a letter declining her claim.
- Lourdes renewed her demand for payment; Philam Plans rejected it, prompting Lourdes to file suit against Philam Plans, Perla and Ma. Celeste before the Regional Trial Court (RTC), Quezon City.
Procedural History and Lower Court Decisions
- RTC Decision (March 30, 2006): Rendered judgment ordering Philam Plans, Perla and Ma. Celeste, solidarily, to pay Lourdes all benefits from her husband’s pension plan, specifically:
- P997,050.00 — proceeds of his term insurance;
- P2,890,000.00 — lump sum pension benefit upon maturity of the plan;
- P100,000.00 — moral damages;
- Costs of suit.
- RTC held that Manuel was not guilty of concealing his state of health from his pension plan application.
- Court of Appeals (CA) Decision (December 18, 2007): Reversed the RTC. The CA held that insurance policies are contracts uberrimae fidae (of utmost good faith) requiring the insured to disclose conditions affecting risk or material facts he knew or ought to know; thus, Manuel’s nondisclosure constituted concealment.
Issues Presented to the Supreme Court
- Whether the CA erred in finding Manuel guilty of concealing his illness when he left blank and did not answer questions in his pension plan application regarding ailments.
- Whether the CA erred in holding Manuel bound by the failure of respondents Perla and Ma. Celeste to declare Manuel’s health condition in the application.
- Whether the CA erred in finding that Philam Plans’ approval of Manuel’s application and acceptance of premiums precluded it from denying Lourdes’ claim.
Application Form: Representations and Declarations
- Manuel’s signed application contained express representations and declarations, including:
- “I hereby represent and declare to the best of my knowledge that: ... (c) I have never been treated for heart condition, high blood pressure, cancer,