G.R. No. 113899, October 13, 1999
FACTS:
A contract of group life insurance was executed between petitioner Grepalife) and DBP. Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP.
Dr. Wilfredo Leuterio, a housing debtor of DBP applied for membership in the group life insurance plan. In an application form, Dr. Leuterio answered yes to the question asking if he is in good health.
Grepalife issued Certificate No. B-18558, as insurance coverage of Dr. Leuterio, to the extent of his DBP mortgage indebtedness amounting to eighty-six thousand, two hundred (P86,200.00) pesos.
Dr. Leuterio died due to "massive cerebral hemorrhage." Consequently, DBP submitted a death claim to Grepalife. Grepalife denied the claim alleging that Dr. Leuterio was not physically healthy when he applied for an insurance coverage. Grepalife insisted that Dr. Leuterio did not disclose he had been suffering from hypertension, which caused his death.
The trial court rendered a decision in favor of respondent widow and against Grepalife. On May 17, 1993, the Court of Appeals sustained the trial court’s decision. Hence, the present petition.
ISSUES:
a.
W/N Grepalife is liable to DBP which
is not a party to the case for payment of the proceeds of a mortgage redemption
insurance?
b.
W/N Grepalife will pay to DPB the
amount of P86,200.00 in the absence of any evidence to show how much was the
actual amount payable to DBP in accordance with its group insurance contract
with defendant-appellant?
HELD:
a.
The rationale of a group insurance
policy of mortgagors, otherwise known as the "mortgage redemption
insurance," is a device for the protection of both the mortgagee and the
mortgagor. On the part of the mortgagee, it has to enter into such form of
contract so that in the event of the unexpected demise of the mortgagor during
the subsistence of the mortgage contract, the proceeds from such insurance will
be applied to the payment of the mortgage debt, thereby relieving the heirs of
the mortgagor from paying the obligation. In a similar vein, ample protection is given
to the mortgagor under such a concept so that in the event of death; the
mortgage obligation will be extinguished by the application of the insurance
proceeds to the mortgage indebtedness. Consequently, where the mortgagor pays
the insurance premium under the group insurance policy, making the loss payable
to the mortgagee, the insurance is on the mortgagor’s interest, and the
mortgagor continues to be a party to the contract. In this type of policy
insurance, the mortgagee is simply an appointee of the insurance fund, such
loss-payable clause does not make the mortgagee a party to the contract.
Section
8 of the Insurance Code provides: "Unless the policy provides, where a
mortgagor of property effects insurance in his own name providing that the loss
shall be payable to the mortgagee, or assigns a policy of insurance to a
mortgagee, the insurance is deemed to be upon the interest of the mortgagor,
who does not cease to be a party to the original contract, and any act of his,
prior to the loss, which would otherwise avoid the insurance, will have the
same effect, although the property is in the hands of the mortgagee, but any
act which, under the contract of insurance, is to be performed by the
mortgagor, may be performed by the mortgagee therein named, with the same
effect as if it had been performed by the mortgagor."
The
insured private respondent did not cede to the mortgagee all his rights or
interests in the insurance, the policy stating that: "In the event of the
debtor’s death before his indebtedness with the Creditor [DBP] shall have been
fully paid, an amount to pay the outstanding indebtedness shall first be paid
to the creditor and the balance of sum assured, if there is any, shall then be
paid to the beneficiary/ies designated by the debtor." When DBP
submitted the insurance claim against petitioner, the latter denied payment
thereof, interposing the defense of concealment committed by the insured.
Thereafter, DBP collected the debt from the mortgagor and took the necessary
action of foreclosure on the residential lot of private Respondent.
b. Petitioner’s claim is without merit. A life insurance policy is a valued policy. Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policy. The mortgagor paid the premium according to the coverage of his insurance, which states that: "The policy states that upon receipt of due proof of the Debtor’s death during the terms of this insurance, a death benefit in the amount of P86,200.00 shall be paid.
In the event of the debtor’s death before his indebtedness with the creditor shall have been fully paid, an amount to pay the outstanding indebtedness shall first be paid to the Creditor and the balance of the Sum Assured, if there is any shall then be paid to the beneficiary/ies designated by the debtor." However, DBP foreclosed in 1995 their residential lot, in satisfaction of mortgagor’s outstanding loan. Considering this supervening event, the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. Equity dictates that DBP should not unjustly enrich itself at the expense of another (Nemo cum alterius detrimenio protest). Hence, it cannot collect the insurance proceeds, after it already foreclosed on the mortgage. The proceeds now rightly belong to Dr. Leuterio’s heirs represented by his widow, herein private respondent Medarda Leuterio.
