Case Summary (G.R. No. 113899)
Petitioner
Great Pacific Life Assurance Corporation
Respondents
- Court of Appeals (affirmed trial court)
- Medarda V. Leuterio (widow of the insured)
Key Dates
• November 11, 1983 – Dr. Leuterio applies for membership in DBP’s group life insurance plan
• November 15, 1983 – Grepalife issues Certificate No. B-18558 covering Dr. Leuterio’s P86,200 mortgage indebtedness
• August 6, 1984 – Dr. Leuterio dies of massive cerebral hemorrhage
• October 20, 1986 – Widow files complaint for specific performance with damages against Grepalife
• February 22, 1988 – Trial court renders judgment in favor of widow and DBP
• May 17, 1993 – Court of Appeals affirms judgment
• October 13, 1999 – Supreme Court issues decision
Applicable Law
• 1987 Philippine Constitution (binding on decisions rendered after its effectivity)
• Insurance Code, particularly Sections 26 (Concealment), 8 (Mortgagor’s interest), and 183 (Life insurance as valued policy)
• Rule 45 of the Rules of Court (petition for review on certiorari)
Facts
- DBP and Grepalife enter into a group life insurance contract covering eligible housing loan mortgagors.
- Dr. Leuterio, a DBP borrower, applies and represents he is in good health with no history of hypertension or related disorders.
- Grepalife issues a policy covering his outstanding mortgage balance of P86,200 payable to DBP as creditor.
- Upon Dr. Leuterio’s death, DBP submits a claim which Grepalife denies for alleged concealment of hypertension.
- DBP collects the loan from the estate and forecloses on the mortgaged property; the widow then brings suit for specific performance.
Issues
- Whether the widow, and not DBP (the loss-payee), is the proper party to enforce the group life insurance policy.
- Whether there was material concealment by Dr. Leuterio regarding his health condition that would void the policy.
- Whether the policy proceeds require proof of the actual outstanding mortgage indebtedness at the date of death.
Insurable Interest and Proper Party to Sue
• A mortgage redemption insurance policy insures the mortgagor’s interest; the mortgagee is merely a loss-payable appointee and not a co-party.
• Under Section 8 of the Insurance Code, the mortgagor remains a party and may sue on the policy despite naming the mortgagee as payee.
• Jurisprudence (Gonzales La O v. Yek Tong Lin Fire & Marine Ins. Co.) confirms the insured or successor in interest may maintain suit even where the mortgagee benefits.
• Conclusion: The widow, as successor in interest to her husband, is a proper party to enforce the policy.
Concealment Defense
• Concealment requires proof that the insured knowingly withheld a fact material to the risk with intent to defraud.
• Grepalife rested its defense on the attending physician’s death certificate noting “possible hypertension” and the widow’s uncertain recollection.
• No autopsy was conducted; medical testimony was inconclusive and hearsay was improperly relied upon.
• The insurer failed to prove fraudulent intent or material misrepresentation by clear and convincing evidence.
• Conclusion: The concealment defense is unsupported; the insurer cannot avoid liability.
Quantum of Insurance Proceeds
• Life insurance is a valued policy; the sum assured (P86,200) i
Case Syllabus (G.R. No. 113899)
Facts
- Great Pacific Life Assurance Corporation (Grepalife) entered into a group life insurance contract with the Development Bank of the Philippines (DBP) covering eligible housing‐loan mortgagors.
- On November 11, 1983, Dr. Wilfredo Leuterio applied for membership in the group plan, answering that he had never consulted a physician for any serious condition and that he was in good health.
- Certificate No. B-18558 was issued on November 15, 1983, insuring Dr. Leuterio’s outstanding indebtedness to DBP in the amount of ₱86,200.00.
- Dr. Leuterio died on August 6, 1984, of a massive cerebral hemorrhage.
- Upon submission of a death claim, Grepalife denied coverage, alleging that Dr. Leuterio had concealed hypertension.
- On October 20, 1986, Medarda V. Leuterio, widow‐beneficiary, filed a complaint for Specific Performance with Damages against Grepalife before RTC Misamis Oriental, Branch 18 (Civil Case No. 10788).
Trial Court Proceedings and Ruling
- Trial was conducted on the widow’s complaint, including testimony of Dr. Hernando Mejia, who issued the death certificate and noted “possible hypertension” based partly on the widow’s account; no autopsy was performed.
- On February 22, 1988, the Regional Trial Court rendered judgment:
- Ordered Grepalife to pay ₱86,200.00 to DBP as creditor‐beneficiary under Certificate B-18558.
- Dismissed claims for damages, attorney’s fees, and litigation expenses.
- Dismissed the complaint insofar as it concerned any plaintiffs other than the widow.
- Costs awarded against Grepalife.
Court of Appeals Decision
- In CA-G.R. CV No. 18341, the Court of Appeals issued its Decision on May 17, 1993, and its Resolution on January 4, 1994.
- It affirmed the trial court in toto, holding that:
- The widow, though not the named creditor, was a proper party to sue.
- Grepalife failed to prove concealment of a material fact by Dr. Leuterio.
- The policy proceeds were properly payable to DBP under the loss‐payable clause.