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SUN LIFE OF CANADA v. MA. DAISY'S. SIBYA

FACTS:

Atty. Jesus Sibya, Jr. applied for life insurance with Sun Life and disclosed his previous lithotripsy procedure in 1987. Sun Life approved his application and issued a policy with respondents as beneficiaries. However, Atty. Jesus Jr. died as a result of a gunshot wound. His wife, Ma. Daisy, filed a claim for death benefits, but Sun Life denied the claim due to non-disclosure of details about previous medical treatment. Sun Life offered to refund the premiums paid, but the respondents insisted on their claim. Sun Life then filed a Complaint for Rescission alleging that there was a non-disclosure of high-risk medical conditions. However, the RTC dismissed the complaint, ruling that there was no material concealment or misrepresentation. The RTC ordered Sun Life to pay death benefits, damages, and attorney's fees. Sun Life appealed to the CA, which affirmed the RTC's decision but modified it by absolving Sun Life from violations of the Insurance Code.

ISSUES:

  1. Whether Atty. Jesus Jr. committed material concealment and misrepresentation in his application for life insurance with Sun Life.

  2. Whether Sun Life violated Sections 241, paragraph 1(b), (d), and (e), and 242 of the Insurance Code.

  3. Whether Sun Life is liable to pay death benefits, damages, and attorney's fees and costs of suit to the respondents.

RULING:

  1. Atty. Jesus Jr. did not commit material concealment and misrepresentation in his application for life insurance with Sun Life.

  2. Sun Life did not violate Sections 241, paragraph 1(b), (d), and (e), and 242 of the Insurance Code.

  3. Sun Life is liable to pay death benefits, damages, and attorney's fees and costs of suit to the respondents.

PRINCIPLES:

  • Material concealment and misrepresentation must be present in an application for insurance to warrant the denial of a claim. Without such concealment or misrepresentation, the insurer cannot be relieved of its obligation to pay the insured's claim.

  • The burden of proving the existence of material concealment or misrepresentation rests on the insurer.

  • The insurer has the means to investigate and verify the information provided by the applicant for insurance, and it cannot avoid liability by claiming ignorance of certain facts.

  • Violation of Sections 241 and 242 of the Insurance Code may result in the imposition of penalties and sanctions on the insurer.