1.Vda. de Canilang vs.

Court of Appeals [GR 92492, 17 June 1993]

Third Division, Feliciano (J): 4 concur Facts: On 18 June 1982, Jaime Canilang consulted Dr. Wilfredo B.
Claudio and was diagnosed as suffering from "sinus tachycardia." The doctor prescribed the following
for him: Trazepam, a tranquilizer; and Aptin, a beta-blocker drug. Mr. Canilang consulted the same
doctor again on 3 August 1982 and this time was found to have "acute bronchitis." On the next day, 4
August 1982, Jaime Canilang applied for a "non-medical" insurance policy with Great Pacific Life
Assurance Company (Grepalife) naming his wife, Thelma Canilang, as his beneficiary. Jaime Canilang was
issued ordinary life insurance Policy 345163, with the face value of P19,700, effective as of 9 August
1982. On 5 August 1983, Jaime Canilang died of "congestive heart failure," "anemia," and "chronic
anemia." Vda. de Canilang, widow and beneficiary of the insured, filed a claim with Grepalife which the
insurer denied on 5 December 1983 upon the ground that the insured had concealed material
information from it. Vda. de Canilang then filed a complaint against Grepalife with the Insurance
Commission for recovery of the insurance proceeds. During the hearing called by the Insurance
Commissioner, Vda. de Canilang testified that she was not aware of any serious illness suffered by her
late husband and that, as far as she knew, her husband had died because of a kidney disorder. A
deposition given by Dr. Wilfredo Claudio was presented by Vda. De Canilang. There Dr. Claudio stated
that he was the family physician of the deceased Jaime Canilang and that he had previously treated him
for "sinus tachycardia" and "acute bronchitis." Grepalife for its part presented Dr. Esperanza Quismorio,
a physician and a medical underwriter working for Grepalife. She testified that the deceased's insurance
application had been approved on the basis of his medical declaration. She explained that as a rule,
medical examinations are required only in cases where the applicant has indicated in his application for
insurance coverage that he has previously undergone medical consultation and hospitalization. In a
decision dated 5 November 1985, Insurance Commissioner Armando Ansaldo ordered Grepalife to pay
P19,700.00 plus legal interest and P2,000.00 as attorney's fees. On appeal by Grepalife, the Court of
Appeals reversed and set aside the decision of the Insurance Commissioner and dismissed Thelma
Canilang's complaint and Grepalife's counterclaim. The Court of Appeals found that the use of the word
"intentionally" by the Insurance Commissioner in defining and resolving the issue agreed upon by the
parties at pre-trial before the Insurance Commissioner was not supported by the evidence; that the
issue agreed upon by the parties had been whether the deceased insured, Jaime Canilang, made a
material concealment as to the state of his health at the time of the filing of insurance application,
justifying Grepalife's denial of the claim. Vda. de Canilang Thelma Canilang filed the petition for review
on certiorari.

Issue [1]: Whether the information Canilang failed to disclose was material to the ability of Grepalife to
estimate the probable risk he presented as a subject of life insurance.

Held [1]: YES. The information which Jaime Canilang failed to disclose was material to the ability of
Grepalife to estimate the probable risk he presented as a subject of life insurance. Had Canilang
disclosed his visits to his doctor, the diagnosis made and the medicines prescribed by such doctor, in the
insurance application, it may be reasonably assumed that Grepalife would have made further inquiries
and would have probably refused to issue a non-medical insurance policy or, at the very least, required a
higher premium for the same coverage. The materiality of the information withheld by Grepalife did not
depend upon the state of mind of Jaime Canilang. A man's state of mind or subjective belief is not
capable of proof in our judicial process, except through proof of external acts or failure to act from
which inferences as to his subjective belief may be reasonably drawn. Neither does materiality depend
upon the actual or physical events which ensue. Materiality relates rather to the "probable and
reasonable influence of the facts" upon the party to whom the communication should have been made,
in assessing the risk involved in making or omitting to make further inquiries and in accepting the
application for insurance; that "probable and reasonable influence of the facts" concealed must, of
course, be determined objectively, by the judge ultimately.

Issue [2]: Whether Grepalife had waived inquiry into the concealment by issuing the insurance policy
notwithstanding Canilang's failure to set out answers to some of the questions in the insurance
application.

Held [2]: NO. The insurance applied for was a "non-medical" insurance policy. In Saturnino v.
PhilippineAmerican Life Insurance Company, the Court held that "if anything, the waiver of medical
examination [in a non-medical insurance contract] renders even more material the information required
of the applicant concerning previous condition of health and diseases suffered, for such information
necessarily constitutes an important factor which the insurer takes into consideration in deciding
whether to issue the policy or not." It cannot be excused that that the failure of Canilang to convey
certain information to the insurer was not intentional in nature. Section 27 of the Insurance Code of
1978 is properly read as referring to "any concealment" without regard to whether such concealment is
intentional or unintentional. The phrase "whether intentional or unintentional" was in fact superfluous.
The deletion of the phrase "whether intentional or unintentional" could not have had the effect of
imposing an affirmative requirement that a concealment must be intentional if it is to entitle the injured
party to rescind a contract of insurance. The restoration in 1985 by BP 874 of the phrase "whether
intentional or unintentional" merely underscored the fact that all throughout (from 1914 to 1985), the
statute did not require proof that concealment must be "intentional" in order to authorize rescission by
the injured party. In any case, herein, the nature of the facts not conveyed to the insurer was such that
the failure to communicate must have been intentional rather than merely inadvertent. For Jaime
Canilang could not have been unaware that this heart beat would at times rise to high and alarming
levels and that he had consulted a doctor twice in the 2 months before applying for non-medical
insurance. Indeed, the last medical consultation took place just the day before the insurance application
was filed. In all probability, Jaime Canilang went to visit his doctor precisely because of the discomfort
and concern brought about by his experiencing "sinus tachycardia." Grepalife had not waived inquiry
into the concealment by issuing the insurance policy notwithstanding Canilang's failure to set out
answers to some of the questions in the insurance application. Such failure precisely constituted
concealment on the part of Canilang. Vda. de Canilang's argument, if accepted, would obviously erase
Section 27 from the Insurance Code of 1978.

2. MANULIFE PHILIPPINES, INC., Petitioner vs. HERMENEGILDA YBAÑEZ, Respondent

G.R. No. 204736

Facts: Manulife Philippines, Inc. (Manulife) instituted a Complaint for Rescission of Insurance Contracts
against Hermenegilda Ybañez (Hermenegilda) and the BPI Family Savings Bank (BPI Family). It is alleged in
the Complaint that Insurance which Manulife issued in favor of Dr. Gumersindo Solidum Ybañez (insured),
were void due to concealment or misrepresentation of material facts in the latter's applications for life
insurance; that Hermenegilda, wife of the said insured, was revocably designated as beneficiary in the
subject insurance policies; that on November 17, 2003, when one of the subject insurance policies had
been in force for only one year and three months, while the other for only four months, the insured died;
that Manulife conducted an investigation into the circumstances leading to the said insured's death, in
view of the aforementioned entries in the said insured's Death Certificate; that Manulife thereafter
concluded that the insured misrepresented or concealed material facts at the time the subject insurance
policies were applied for; and that for this reason Manulife accordingly denied Hermenegilda's death
claims and refunded the premiums that the insured paid on the subject insurance policies.

BPI Family filed a Manifestation praying that either it be dropped from the case or that the case be
dismissed with respect to it, since no objection was interposed to this prayer by either Manulife or
Hermenegilda, the RTC granted the prayer. Manulife presented its sole witness in the person of Ms.
Jessiebelle Victoriano (Victoriano ), the Senior Manager of its Claims and Settlements Department. The
oral testimony of this witness chiefly involved identifying herself as the Senior Manager of Manulife's
Claims and Settlements Department and also identifying the evidence. After due proceedings, the RTC
dismissed Manulife's Complaint. The RTC found no merit at all in Manulife's Complaint for rescission of
the subject insurance policies because it utterly failed to prove that the insured had committed the alleged
misrepresentation/s or concealment/s. The CA affirmed the decision of RTC.

Issue: Whether the CA committed any reversible error in affirming the RTC Decision dismissing Manulife's
Complaint for rescission of insurance contracts for failure to prove concealment on the part of the insured.

Held: No. The RTC correctly held that the CDH’s medical records that might have established the insured’s
purported misrepresentation/s or concealment/s was inadmissible for being hearsay, given the fact that
Manulife failed to present the physician or any responsible official of the CDH who could confirm or attest
to the due execution and authenticity of the alleged medical records.

Manulife's sole witness gave no evidence at all relative to the particulars of the purported concealment
or misrepresentation allegedly perpetrated by the insured. In fact, Victoriano merely perfunctorily
identified the documentary exhibits adduced by Manulife; she never testified in regard to the
circumstances attending the execution of these documentary exhibits much less in regard to its contents.
Of course, the mere mechanical act of identifying these documentary exhibits, without the testimonies of
the actual participating parties thereto, adds up to nothing. These documentary exhibits did not
automatically validate or explain themselves.

"The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the
contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the
duty to establish such defense by satisfactory and convincing evidence rests upon the insurer." For failure
of Manulife to prove intent to defraud on the part of the insured, it cannot validly sue for rescission of
insurance contracts.

3. Sunlife Assurance Company of Canada vs. Court of Appeals [GR 105135, 22 June 1995] First Division,
Quiason (J): 4 concur

Facts: On 15 April 1986, Robert John B. Bacani procured a life insurance contract for himself from Sunlife
Assurance Company of Canada. He was issued Policy 3-903-766-X valued P100,000.00, with double
indemnity in case of accidental death. The designated beneficiary was his mother, Bernarda Bacani. On
26 June 1987, the insured died in a plane crash. Bernarda Bacani filed a claim with Sunlife, seeking the
benefits of the insurance policy taken by her son. Sunlife conducted an investigation and its findings
prompted it to reject the claim. In its letter, Sunlife informed Bacani, that the insured did not disclosed
material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable. A
check representing the total premiums paid in the amount of P10,172.00 was attached to said letter.
Sunlife claimed that the insured gave false statements in his application when he answered the
following questions: "5. Within the past 5 years have you: a) consulted any doctor or other health
practitioner? b) submitted to: ECG? X-rays? blood tests? other tests? c) attended or been admitted to
any hospital or other medical facility? 6. Have you ever had or sought advice for: xxx b) urine, kidney or
bladder disorder?" The deceased answered questions No. 5(a) in the affirmative but limited his answer
to a consultation with a certain Dr. Reinaldo D. Raymundo of the Chinese General Hospital on February
1986, for cough and flu complications. The other questions were answered in the negative. Sunlife
discovered that two weeks prior to his application for insurance, the insured was examined and
confined at the Lung Center of the Philippines, where he was diagnosed for renal failure. During his
confinement, the deceased was subjected to urinalysis, ultra-sonography and hematology tests. On 17
November 1988, Bernarda Bacani and her husband, respondent Rolando Bacani, filed an action for
specific performance against Sunlife with the Regional Trial Court, Branch 191, Valenzuela, Metro
Manila. Sunlife filed its answer with counterclaim and a list off exhibits consisting of medical records
furnished by the Lung Center of the Philippines. On 14 January 1990, Bacani filed a "Proposed
Stipulation with Prayer for Summary Judgment" where they manifested that they "have no evidence to
refute the documentary evidence of concealment/misrepresentation by the decedent of his health
condition." Sunlife filed its Request for Admissions relative to the authenticity and due execution of
several documents as well as allegations regarding the health of the insured. The Bacanis failed to
oppose said request or reply thereto, thereby rendering an admission of the matters alleged. Sunlife
then moved for a summary judgment and the trial court decided in favor of the Bacanis, ordering Sunlife
to pay the former the amount of P100,000.00 the face value of insured's Insurance Policy 3903766, and
the Accidental Death Benefit in the amount of P100,000.00 and further sum of P5,000.00 in the concept
of reasonable attorney's fees and the costs of the suit. Sunlife's counterclaim was dismissed. Sunlife
appealed to the Court of Appeals, which affirmed the decision of the trial court. Sunlife's motion for
reconsideration was denied, hence, Sunlife filed the petition for review on certiorari.

Issue [1]: Whether good faith is a defense in concealment.

Held [1]: NO. Section 26 of the Insurance Code is explicit in requiring a party to a contract of insurance
to communicate to the other, in good faith, all facts within his knowledge which are material to the
contract and as to which he makes no warranty, and which the other has no means of ascertaining. Said
Section provides that "a neglect to communicate that which a party knows and ought to communicate,
is called concealment."

Materiality is to be determined not by the event, but solely by the probable and reasonable influence of
the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of
the proposed contract or in making his inquiries. The terms of the contract are clear. The insured is
specifically required to disclose to the insurer matters relating to his health. The information which the
insured failed to disclose were material and relevant to the approval and the issuance of the insurance
policy. The matters concealed would have definitely affected Bacani's action on his application, either by
approving it with the corresponding adjustment for a higher premium or rejecting the same. Moreover,
a disclosure may have warranted a medical examination of the insured by Sunlife in order for it to
reasonably assess the risk involved in accepting the application. In Vda. de Canilang v. Court of Appeals,
223 SCRA 443 (1993), the Court held that materiality of the information withheld does not depend on
the state of mind of the insured. Neither does it depend on the actual or physical events which ensue.
Thus, "good faith" is no defense in concealment. The insured's failure to disclose the fact that he was
hospitalized for two weeks prior to filing his application for insurance, raises grave doubts about his
bonafides. It appears that such concealment was deliberate on his part.

Issue [2]: Whether Sunlife's waiver of the medical examination of the insured debunks the materiality of
the facts concealed.

Held [2]: NO. The argument, that Sunlife's waiver of the medical examination of the insured debunks the
materiality of the facts concealed, is untenable. In Saturnino v. Philippine American Life Insurance
Company, 7 SCRA 316 (1963), the Court held that "the waiver of a medical examination [in a non-
medical insurance contract] renders even more material the information required of the applicant
concerning previous condition of health and diseases suffered, for such information necessarily
constitutes an important factor which the insurer takes into consideration in deciding whether to issue
the policy or not." Moreover, such argument would make Section 27 of the Insurance Code, which
allows the injured party to rescind a contract of insurance where there is concealment, ineffective.
Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well
settled that the insured need not die of the disease he had failed to disclose to the insurer. It is sufficient
that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance
policy or in making inquiries.

4. Ng Gan Zee vs Asian Crusader Life Assurance Corporation

122 SCRA 461 – Mercantile Law – Insurance Law – Concealment –Misrepresentation – Duty of Insurance
Company to Make Inquiry

In May 1962, Kwong Nam applied for a 20-year endowment policy with Asian Crusader Life Assurance
Corporation. Asian Crusader asked the following question:

Has any life insurance company ever refused your application for insurance or for reinstatement of a
lapsed policy or offered you a policy different from that applied for? If, so, name company and date.

Kwong Nam answered “No” to the above question.

Kwong Nam was also examined by Asian Crusader’s medical examiner to whom he disclosed that he was
once operated and a tumor was removed from his stomach and such was “associated with ulcer of the
stomach.”

Kwong Nam’s application was approved. In May 1963, he died. His widow, Ng Gan Zee, filed an
insurance claim but Asian Crusader refused her claim as it insisted that Kwong Nam concealed material
facts from them when he was applying for the insurance; that he misrepresented the fact that he was
actually denied application by Insular Life when he was renewing his application with them; that Kwong
Nam was actually operated for peptic ulcer.

ISSUE: Whether or not Ng Gan Zee can collect the insurance claim.
HELD: Yes. Asian Crusader was not able to prove that Kwong Nam’s statement that Insular Life did not
deny his insurance renewal with them is untrue. In fact, evidence showed that in April 1962, Insular Life
approved Kwong Nam’s request of reinstatement only with the condition that Kwong Nam’s plan will be
lowered from P50,000.00 to P20,000.00 considering his medical history.

Kwong Nam did not conceal anything from Asian Crusader. His statement that his operation, in which a
tumor the size of a hen’s egg was removed from his stomach, was only “associated with ulcer of the
stomach” and not peptic ulcer can be considered as an expression made in good faith of his belief as to
the nature of his ailment and operation. Indeed, such statement must be presumed to have been made
by him without knowledge of its incorrectness and without any deliberate intent on his part to mislead
Asian Crusader.

While it may be conceded that, from the viewpoint of a medical expert, the information communicated
was imperfect, the same was nevertheless sufficient to have induced Asian Crusader to make further
inquiries about the ailment and operation of Kwong Nam. It has been held that where, upon the face of
the application, a question appears to be not answered at all or to be imperfectly answered, and the
insurers issue a policy without any further inquiry, they waive the imperfection of the answer and
render the omission to answer more fully immaterial.

5. Great Pacific Life Assurance Company vs. Court of Appeals [GR L-31845, 30 April 1979]; also
Mondragon vs. Court of Appeals [GR L-31878] First Division, De Castro (J): 4 concur, 1 took no part See
case entry 17

Facts: On 14 March 1957, Ngo Hing filed an application with the Great Pacific Life Assurance Company
for a 20-year endowment policy in the amount of P50,000.00 on the life of his one-year old daughter
Helen Go. Ngo Hing supplied the essential data which Lapulapu D. Mondragon, Branch Manager of the
Pacific Life in Cebu City wrote on the corresponding form in his own handwriting . Mondragon finally
type-wrote the data on the application form which was signed by Ngo Hing. The latter paid the annual
premium, the sum of P1,077.75 going over to the Company, but he retained the amount of P1,317.00 as
his commission for being a duly authorized agent of Pacific Life. Upon the payment of the insurance
premium, the binding deposit receipt was issued to Ngo Hing. Likewise, Mondragon handwrote at the
bottom of the back page of the application form his strong recommendation for the approval of the
insurance application. Then on 30 April 1957, Mondragon received a letter from Pacific Life disapproving
the insurance application. The letter stated that the said life insurance application for 20-year
endowment plan is not available for minors below 7 years old, but Pacific Life can consider the same
under the Juvenile Triple Action Plan, and advised that if the offer is acceptable, the Juvenile Non-
Medical Declaration be sent to the Company. The non-acceptance of the insurance plan by Pacific Life
was allegedly not communicated by Mondragon to Ngo Hing. Instead, on 6 May 1957, Mondragon wrote
back Pacific Life again strongly recommending the approval of the 20-year endowment life insurance on
the ground that Pacific Life is the only insurance company not selling the 20- year endowment insurance
plan to children, pointing out that since 1954 the customers, especially the Chinese, were asking for
such coverage. It was when things were in such state that on 28 May 1957 Helen Go died of influenza
with complication of broncho-pneumonia. Thereupon, Ngo Hing sought the payment of the proceeds of
the insurance, but having failed in his effort, he filed the action for the recovery of the same before the
Court of First Instance of Cebu, which rendered a decision against Pacific Life and Mondragon, orderig
them to solidarily pay Ngo Hing the amount of P50,000.00 with interest at 6% from the date of the filing
of the complaint, and the sum of P10,000.00 as attorney's fees plus costs of suits. On appeal, the Court
of Appeals set aside the appealed decision of the Court of First Instance of Cebu, and absolved Pacific
Life and Mondragon from liability on the insurance policy, but ordered the reimbursement to Ngo Hing
the amount of P1,077.75, without interest. On reconsideration, however, the appellate court affirmed in
toto the decision of the Court of First Instance of Cebu, ordering Pacific Life and Mondragon jointly and
severally to pay Ngo Hing. Two petitions for certiorari by way of appeal were filed by Pacific Life and
Mondragon. The petitons were consolidated by the Supreme Court in a resolution dated 29 April 1970.

Issue: Whether the binding deposit receipt constituted a temporary contract of the life insurance in
question, and thus negate the claim that the insurance contract was perfected.

Held: YES. The provisions printed on the binding deposit receipt show that the binding deposit receipt is
intended to be merely a provisional or temporary insurance contract and only upon compliance of the
following conditions: (1) that the company shall be satisfied that the applicant was insurable on
standard rates; (2) that if the company does not accept the application and offers to issue a policy for a
different plan, the insurance contract shall not be binding until the applicant accepts the policy offered;
otherwise, the deposit shall be refunded; and (3) that if the applicant is not insurable according to the
standard rates, and the company disapproves the application, the insurance applied for shall not be in
force at any time, and the premium paid shall be returned to the applicant. Clearly implied from the
aforesaid conditions is that the binding deposit receipt in question is merely an acknowledgment, on
behalf of the company, that the latter's branch office had received from the applicant the insurance
premium and had accepted the application subject for processing by the insurance company; and that
the latter will either approve or reject the same on the basis of whether or not the applicant is
"insurable on standard rates." Since Pacific Life disapproved the insurance application of Ngo Hing, the
binding deposit receipt in question had never become in force at any time. Upon this premise, the
binding deposit receipt is, manifestly, merely conditional and does not insure outright. Where an
agreement is made between the applicant and the agent, no liability shall attach until the principal
approves the risk and a receipt is given by the agent. The acceptance is merely conditional, and is
subordinated to the act of the company in approving or rejecting the application. Thus, in life insurance,
a "binding slip" or "binding receipt" does not insure by itself. It bears repeating that through the intra-
company communication of 30 April 1957, Pacific Life disapproved the insurance application in question
on the ground that it is not offering the 20-year endowment insurance policy to children less than 7
years of age. What it offered instead is another plan known as the Juvenile Triple Action, which Ngo Hing
failed to accept. In the absence of a meeting of the minds between Pacific Life and Ngo Hing over the
20-year endowment life insurance in the amount of P50,000.00 in favor of the latter's one-year old
daughter, and with the non-compliance of the abovequoted conditions stated in the disputed binding
deposit receipt, there could have been no insurance contract duly perfected between them.
Accordingly, the deposit paid by Ngo Hing shall have to be refunded by Pacific Life.

6. Philamcare Health Systems Inc. vs. Court of Appeals [GR 125678, 18 March 2002] First Division,
Ynares-Santiago (J): 3 concur See also case entry 13

Facts: Ernani Trinos, deceased husband of Julita Trinos, applied for a health care coverage with
Philamcare Health Systems, Inc. In the standard application form, he answered no to the following
question: "Have you or any of your family members ever consulted or been treated for high blood
pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes, give details). "
The application was approved for a period of one year from 1 March 1988 to 1 March 1989. Accordingly,
he was issued Health Care Agreement P010194. Under the agreement, Trinos' husband was entitled to
avail of hospitalization benefits, whether ordinary or emergency, listed therein. He was also entitled to
avail of "out-patient benefits" such as annual physical examinations, preventive health care and other
out-patient services. Upon the termination of the agreement, the same was extended for another year
from 1 March 1989 to 1 March 1990, then from 1 March 1990 to 1 June 1990. The amount of coverage
was increased to a maximum sum of P75,000.00 per disability. During the period of his coverage, Ernani
suffered a heart attack and was confined at the Manila Medical Center (MMC) for one month beginning
9 March 1990. While her husband was in the hospital, Trinos tried to claim the benefits under the health
care agreement. However, Philamcare denied her claim saying that the Health Care Agreement was
void. According to Philamcare, there was a concealment regarding Ernani's medical history. Doctors at
the MMC allegedly discovered at the time of Ernani's confinement that he was hypertensive, diabetic
and asthmatic, contrary to his answer in the application form. Thus, Trinos paid the hospitalization
expenses herself, amounting to about P76,000.00. After her husband was discharged from the MMC, he
was attended by a physical therapist at home. Later, he was admitted at the Chinese General Hospital.
Due to financial difficulties, however, Trinos brought her husband home again. In the morning of 13
April 1990, Ernani had fever and was feeling very weak. Trinos was constrained to bring him back to the
Chinese General Hospital where he died on the same day. On 24 July 1990, Trinos instituted with the
Regional Trial Court of Manila, Branch 44, an action for damages against Philamcare and its president,
Dr. Benito Reverente (Civil Case 90 53795). She asked for reimbursement of her expenses plus moral
damages and attorney's fees. After trial, the lower court ruled against Philamcare and Reverente,
ordering them to pay and reimburse the medical and hospital coverage of the late Ernani Trinos in the
amount of P76,000.00 plus interest, until the amount is fully paid to plaintiff who paid the same; the
reduced amount of moral damages of P10,000.00 to Trinos; the reduced amount of P10,000.00 as
exemplary damages to Trinos; and the attorney's fees of P20,000.00, plus costs of suit. On appeal, the
Court of Appeals affirmed the decision of the trial court but deleted all awards for damages and
absolved Reverente. Philamcare's motion for reconsideration was denied. Hence, Philamcare brought
the petition for review, raising the primary argument that a health care agreement is not an insurance
contract; hence the "incontestability clause" under the Insurance Code does not apply.

Issue [1]: Whether a health care agreement between Philamcare and Ernani Trinos is an insurance
contract.

Held [1]: YES. Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement
whereby one undertakes for a consideration to indemnify another against loss, damage or liability
arising from an unknown or contingent event. An insurance contract exists where the following
elements concur: (1) The insured has an insurable interest; (2) The insured is subject to a risk of loss by
the happening of the designated peril; (3) The insurer assumes the risk; (4) Such assumption of risk is
part of a general scheme to distribute actual losses among a large group of persons bearing a similar
risk; and (5) In consideration of the insurer's promise, the insured pays a premium. Section 3 of the
Insurance Code states that any contingent or unknown event, whether past or future, which may
damnify a person having an insurable interest against him, may be insured against. Every person has an
insurable interest in the life and health of himself. Section 10 provides that "Every person has an
insurable interest in the life and health: (1) of himself, of his spouse and of his children; (2) of any person
on whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money, respecting property or
service, of which death or illness might delay or prevent the performance; and (4) of any person upon
whose life any estate or interest vested in him depends." Herein, the insurable interest of Trinos'
husband in obtaining the health care agreement was his own health. The health care agreement was in
the nature of non-life insurance, which is primarily a contract of indemnity. Once the member incurs
hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the
health care provider must pay for the same to the extent agreed upon under the contract.

Issue [2]: Whether answers made in good faith, where matters of opinion or judgment are called for,
without intent to deceive will avoid a policy when they were untrue.

Held [2]: NO. Where matters of opinion or judgment are called for, answers made in good faith and
without intent to deceive will not avoid a policy even though they are untrue. Thus, although false, a
representation of the expectation, intention, belief, opinion, or judgment of the insured will not avoid
the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance at a lower
rate of premium, and this is likewise the rule although the statement is material to the risk, if the
statement is obviously of the foregoing character, since in such case the insurer is not justified in relying
upon such statement, but is obligated to make further inquiry. There is a clear distinction between such
a case and one in which the insured is fraudulently and intentionally states to be true, as a matter of
expectation or belief, that which he then knows, to be actually untrue, or the impossibility of which is
shown by the facts within his knowledge, since in such case the intent to deceive the insurer is obvious
and amounts to actual fraud. The fraudulent intent on the part of the insured must be established to
warrant rescission of the insurance contract. Concealment as a defense for the health care provider or
insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory
and convincing evidence rests upon the provider or insurer. In any case, with or without the authority to
investigate, Philamcare is liable for claims made under the contract. Having assumed a responsibility
under the agreement, Philamcare is bound to answer the same to the extent agreed upon. In the end,
the liability of the health care provider attaches once the member is hospitalized for the disease or
injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid.

Issue [3]: Whether rescission must be exercised before commencement of an action on the contract.

Held [3]: YES. Under Section 27 of the Insurance Code, "a concealment entitles the injured party to
rescind a contract of insurance." The right to rescind should be exercised previous to the
commencement of an action on the contract. Herein, no rescission was made. Besides, the cancellation
of health care agreements as in insurance policies require the concurrence of the following conditions:
(1) Prior notice of cancellation to insured; (2) Notice must be based on the occurrence after effective
date of the policy of one or more of the grounds mentioned; (3) Must be in writing, mailed or delivered
to the insured at the address shown in the policy; (4) Must state the grounds relied upon provided in
Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is
based. None of the above pre-conditions was fulfilled in this case. When the terms of insurance contract
contain limitations on liability, courts should construe them in such a way as to preclude the insurer
from non-compliance with his obligation. Being a contract of adhesion,

the terms of an insurance contract are to be construed strictly against the party which prepared the
contract — the insurer. By reason of the exclusive control of the insurance company over the terms and
phraseology of the insurance contract, ambiguity must be strictly interpreted against the insurer and
liberally in favor of the insured, especially to avoid forfeiture. This is equally applicable to Health Care
Agreements.

Issue [4]: Whether the membership of the late Trinos is now incontestable.

Held [4]: YES. Under the title Claim procedures of expenses, Philamcare had twelve months from the
date of issuance of the Agreement within which to contest the membership of the patient if he had
previous ailment of asthma, and six months from the issuance of the agreement if the patient was sick
of diabetes or hypertension. The periods having expired, the defense of concealment or
misrepresentation no longer lie.

7. Malayan Insurance Co. Inc. vs. PAP Ltd. Co. (Phil. Br.)

G.R. No. 200784, 7 August 2013

Topic: Concealment, Rescission of Insurance Contract, Alteration in the use of the
thing insured
Ponente: Mendoza, J. Doctrine: Under the Insurance Code of the Philippines:

“Sec. 26. A neglect to communicate that which a party knows and ought to
communicate, is called a concealment.

Sec. 27. A concealment whether intentional or unintentional entitles the injured party
to rescind a contract of insurance. (As amended by Batasang Pambansa Blg. 874)

Sec. 168. An alteration in the use or condition of a thing insured from that to which it is
limited by the policy made without the consent of the insurer, by means within the
control of the insured, and increasing the risks, entitles an insurer to rescind a
contract of fire insurance.”

Facts:
13 May 1996- Malayan Insurance Company (Malayan) issued Fire Insurance Policy to PAP
Co., Ltd. (PAP Co) for the latter’s machineries and equipment located at Sanyo Precision
Phils, Bldg., Phase III, Lot 4, Block 15, PEZA, Rosario, Cavite (Sanyo Building).
Insurance was worth P15M and effective for 1 year. It was procured by PAP Co for RCBC,
the mortgagee of the insured machineries and equipment.
Prior to expiration of the insurance coverage, PAP Co. renewed policy on an “as is” basis.
This was for 13 May 1997 to 13 May 1998.
12 October 1997 and during the subsistence of the renewal policy, the insured machineries
and equipment were totally lost by fir.
PAP Co. filed a fire insurance claim with Malayan in the amount insured.
15 December 1997- Malayan denied since at the time of loss, the insured machineries and
equipment were transferred by PAP Co. to a location different from that indicated in the
policy.
PAP Co. argued that Malayan cannot avoid liability since it was informed of the transfer by
RCBC, the mortgage and the party duty-bound to relay such information.
17 September 2009- RTC ordered Malayan to pay PAP an indemnity for the loss.
27 October 2011- CA affirmed RTC decision. Hence this case.
Issue: Is Malayan liable under the insurance contract?
Ruling: No. Under the policy and when it was renewed, it forbade the removal of the
insured properties unless sanctioned/consented by Malayan. PAP failed to notify and to
obtain consent of Malayan regarding the removal. The transfer also increased the risk. With
the transfer of location of the subject properties, without notice to and consent of Malayan,
PAP committed concealment, misrepresentation and breach of a material warranty. Under
the Insurance Code, Malayan can rescind the insurance contract.
Dispositive: WHEREFORE, the October 27, 2011 Decision of the Court of Appeals is hereby
REVERSED and SET ASIDE. Petitioner Malayan Insurance Company, Inc. is hereby declared
NOT liable for the loss of the insured machineries and equipment suffered by PAP Co., Ltd.
8. MANILA BANKERS LIFE INSURANCE CORPORATION vs. CRESENCIA P. ABAN
G.R. No. 175666. July 29, 2013. Del Castillo, J.

Facts:
Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life Insurance Corporation
(Bankers Life), designating respondent Cresencia P. Aban (Aban), her niece, as her beneficiary. Manila
Bankers issued an insurance policy, with a face value of P100,000.00, in Sotero’s favor after the requisite
medical examination and payment of the insurance premium. When the insurance policy had been in
force for more than two years and seven months, Sotero died. Aban filed a claim for the insurance
proceeds. Manila Bankers denied the claim because of fraud, concealment and/or misrepresentation
(Sotero was not the one who personally applied for insurance coverage but Aban) and filed a case for
rescission and/or annulment of the policy.

Issue: WON Manila Bankers can still rescind the insurance policy.

Held/Ratio: NO, it was Sotero who obtained the insurance for herself, designating Aban as her beneficiary.
Also, the "Incontestability Clause" under Section 48 of the Insurance Code provides that an insurer is given
two years – from the effectivity of a life insurance contract and while the insured is alive – to discover or
prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or
misrepresentation of the insured or his agent. After the two-year period lapses, or when the insured dies
within the period, the insurer must make good on the policy, even though the policy was obtained by
fraud, concealment, or misrepresentation.
G.R. No. 175666, July 29, 2013

MANILA BANKERS LIFE INSURANCE CORPORATION, Petitioner, v. CRESENCIA P. ABAN,Respondent.

Facts:

On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life Insurance
Corporation (Bankers Life), designating respondent Cresencia P. Aban (Aban), her niece,5as her
beneficiary.

Petitioner issued Insurance Policy No. 747411 (the policy), with a face value of P100,000.00, in Sotero's
favor on August 30, 1993, after the requisite medical examination and payment of the insurance
premium.6cralaw virtualaw library

On April 10, 1996,7 when the insurance policy had been in force for more than two years and seven
months, Sotero died. Respondent filed a claim for the insurance proceeds on July 9, 1996. Petitioner
conducted an investigation into the claim,8 and came out with the following findings:

1. Sotero did not personally apply for insurance coverage, as she was illiterate;

2. Sotero was sickly since 1990

3. Sotero did not have the financial capability to pay the insurance premiums on Insurance Policy
No. 747411

4. Sotero did not sign the July 3, 1993 application for insurance;9 [and]

5. Respondent was the one .who filed the insurance application, and x x x designated herself as the
beneficiary.

For the above reasons, petitioner denied respondent's claim on April 16, 1997 and refunded the
premiums paid on the policy.

On April 24, 1997, petitioner filed a civil case for rescission and/or annulment of the policy, which was
docketed as Civil Case No. 97-867 and assigned to Branch 134 of the Makati Regional Trial Court. The
main thesis of the Complaint was that the policy was obtained by fraud, concealment and/or
misrepresentation under the Insurance Code,12 which thus renders it voidable under Article 139013 of
the Civil Code.

Respondent filed a Motion to Dismiss14 claiming that petitioner's cause of action was barred by
prescription pursuant to Section 48 of the Insurance Code, which provides as follows:

Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this
chapter, such right must be exercised previous to the commencement of an action on the contract.

After a policy of life insurance made payable on the death of the insured shall have been in force during
the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement,
the insurer cannot prove that the policy is voidab initio or is rescindible by reason of the fraudulent
concealment or misrepresentation of the insured or his agent.

During the proceedings on the Motion to Dismiss, petitioner's investigator testified in court, stating
among others that the insurance underwriter who solicited the insurance is a cousin of respondent's
husband, Dindo Aban,15 and that it was the respondent who paid the annual premiums on the policy.

Ruling of RTC:

The RTC granted respondent's Motion to Dismiss:

In dismissing the case, the trial court found that Sotero, and not respondent, was the one who procured
the insurance; thus, Sotero could legally take out insurance on her own life and validly designate - as she
did — respondent as the beneficiary. It held further that under Section 48, petitioner had only two years
from the effectivity of the policy to question the same; since the policy had been in force for more than
two years, petitioner is now barred from contesting the same or seeking a rescission or annulment
thereof.

Ruling of CA:

The CA sustained the trial court.

Applying Section 48 to petitioner's case, the CA held that petitioner may no longer prove that the
subject policy was void ab initio or rescindible by reason of fraudulent concealment or
misrepresentation after the lapse of more than two years from its issuance. It ratiocinated that
petitioner was equipped with ample means to determine, within the first two years of the policy,
whether fraud, concealment or misrepresentation was present when the insurance coverage was
obtained. If it failed to do so within the statutory two-year period, then the insured must be protected
and allowed to claim upon the policy.

Issue:

WON THE COURT OF APPEALS ERRED IN SUSTAINING THE APPLICATION OF THE INCONTESTABILITY
PROVISION IN THE INSURANCE CODE BY THE TRIAL COURT.

Ruling:

The Court denied the Petition.

The Court will not depart from the trial and appellate courts' finding that it was Sotero who obtained the
insurance for herself, designating respondent as her beneficiary. Both courts are in accord in this
respect, and the Court is loath to disturb this. While petitioner insists that its independent investigation
on the claim reveals that it was respondent, posing as Sotero, who obtained the insurance, this claim is
no longer feasible in the wake of the courts' finding that it was Sotero who obtained the insurance for
herself. This finding of fact binds the Court.

The so-called "incontestability clause" precludes the insurer from raising the defenses of false
representations or concealment of material facts insofar as health and previous diseases are concerned
if the insurance has been in force for at least two years during the insured’s lifetime. The phrase "during
the lifetime" found in Section 48 simply means that the policy is no longer considered in force after the
insured has died. The key phrase in the second paragraph of Section 48 is "for a period of two years."

As borne by the records, the policy was issued on August 30. 1993, the insured died on April 10, 1996,
and the claim was denied on April 16, 1997. The insurance policy was thus in force for a period of 3
years, 7 months, and 24 days. Considering that the insured died after the two-year period, the plaintiff-
appellant is, therefore, barred from proving that the policy is void ab initio by reason of the insured
fraudulent concealment or misrepresentation or want of insurable interest on the part of the
beneficiary, herein defendant-appellee.

The "Incontestability Clause" under Section 48 of the Insurance Code provides that an insurer is given
two years – from the effectivity of a life insurance contract and while the insured is alive – to discover or
prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or
misrepresentation of the insured or his agent. After the two-year period lapses, or when the insured
dies within the period, the insurer must make good on the policy, even though the policy was obtained
by fraud, concealment, or misrepresentation.

9. Mrs. Henry Harding vs Commercial Union Assurance Company

38 Phil. 464 – Mercantile Law – Insurance Law – Representation – Warranty

In February 1916, Mrs. Harding applied for car insurance for a Studebaker she received as a gift from her
husband. She was assisted by Smith, Bell, and Co. which was the duly authorized representative
(insurance agent) of Commercial Union Assurance Company in the Philippines. The car’s value was
estimated with the help of an experienced mechanic (Mr. Server) of the Luneta Garage. The car was
bought by Mr. Harding for P2,800.00. The mechanic, considering some repairs done, estimated the
value to be at P3,000.00. This estimated value was the value disclosed by Mrs. Harding to Smith, Bell,
and Co. She also disclosed that the value was an estimate made by Luneta Garage (which also acts as an
agent for Smith, Bell, and Co).

In March 1916, a fire destroyed the Studebaker. Mrs. Harding filed an insurance claim but Commercial
Union denied it as it insisted that the representations and averments made as to the cost of the car
were false; and that said statement was a warranty. Commercial Union also stated that the car does not
belong to Mrs. Harding because such a gift [from her husband] is void under the Civil Code.

ISSUE: Whether or not Mrs. Harding is entitled to the insurance claim.

HELD: Yes. Commercial Union is not the proper party to attack the validity of the gift made by Mr.
Harding to his wife.

The statement made by Mrs. Harding as to the cost of the car is not a warranty. The evidence does not
prove that the statement is false. In fact, the evidence shows that the cost of the car is more than the
price of the insurance. The car was bought for P2,800.00 and then thereafter, Luneta Garage made
some repairs and body paints which amounted to P900.00. Mr. Server attested that the car is as good as
new at the time the insurance was effected.

Commercial Union, upon the information given by Mrs. Harding, and after an inspection of the
automobile by its examiner, having agreed that it was worth P3,000, is bound by this valuation in the
absence of fraud on the part of the insured. All statements of value are, of necessity, to a large extent
matters of opinion, and it would be outrageous to hold that the validity of all valued policies must
depend upon the absolute correctness of such estimated value.

10. GAISANO CAGAYAN v. INSURANCE CO. OF NORTH AMERICA

GR No. 147839
June 08, 2006

FACTS: Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. While Levi
Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss
& Co. IMC and LSPI separately obtained from respondent Insurance Company of North America (ICNA)
fire insurance policies for their book debt endorsements related to their ready-made clothing materials
which have been sold or delivered to various customers and dealers of the Insured anywhere in the
Philippines which are unpaid45 days after the time of the loss.

Petitioner Gaisano Cagayan, Inc. is a customer and dealer of IMC and LSPI products. It owns the Gaisano
Superstore Complex which was consumed by fire in 1991. Included in the items destroyed in the fire were
stocks of ready-made clothing materials sold and delivered by IMC and LSPI.

Respondent filed a complaint for damages against Gaisano Cagayan, Inc. alleging that IMC and LSPI filed
their claims under their respective fire insurance policies which it paid, thus it was subrogated to their rights.
Petitioner averred it not be held liable because the items were destroyed due to fortuitous event or force
majeure. The RTC ruled that IMC and LSPI retained ownership of the delivered goods until fully paid, it
must bear the loss (res perit domino). The CA ruled otherwise and ordered petitioner to pay respondent
Php 2,119,205.60 and Php 535,613.00 the amount paid by the latter to IMC and LSPI, respectively.

ISSUE: WON respondent may claim against petitioner for the insured debt.

HELD: Yes, but the order to pay Php 535,613 is deleted for lack of factual basis.

The insurance policy is clear that the subject of the insurance is the book debts and not goods sold and
delivered to the customers and dealers of the insured.

Under Art. 1504 of the Civil code, unless otherwise agreed, the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the
goods are at the buyer's risk whether actual delivery has been made or not; except where delivery of the
goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the
ownership in the goods has been retained by the seller merely to secure performance by the buyer
of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery.

IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full
payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where
ownership is the basis for consideration of who bears the risk of loss, in property insurance, one's interest
is not determined by concept of title, but whether insured has substantial economic interest in the property.

Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or
personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might
directly damnify the insured." Parenthetically, under Section 14 of the same Code, an insurable interest in
property may consist in: (a) an existing interest; (b) an inchoate interest founded on existing interest; or (c)
an expectancy, coupled with an existing interest in that out of which the expectancy arises.

Anyone who derives a benefit from its existence or would suffer loss from its destruction has an insurable
interest in the said property.

The rationale that an obligor should be held exempt from liability when the loss occurs thru a fortuitous
event only holds true when the obligation consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event. It does not apply when the obligation is
pecuniary in nature.

Re: deletion of Php 535,613.00

The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as insurer
and IMC as the insured, but also the amount paid to settle the insurance claim

Art. 2207 of the Civil Code states that if the plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the rights of the insured against the
wrongdoer or the person who has violated the contract.

However, LSPI failed to offer any subrogation receipt as evidence. Failure to substantiate the claim of
subrogation is fatal to petitioner's case for recovery of the amount of P535,613.00.

Gaisano Cagayan, Inc. V. Insurance Company Of North America (2006)

G.R. No. 147839 June 8, 2006

Lessons Applicable: Existing Interest (Insurance)

Laws Applicable: Article 1504,Article 1263, Article 2207 of the Civil Code, Section 13 of Insurance Code

FACTS: Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss
(Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co

IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for
their book debt endorsements related to their ready-made clothing materials which have been sold or
delivered to various customers and dealers of the Insured anywhere in the Philippines which are unpaid
45 days after the time of the loss

February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano Cagayan,
Inc., containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by
fire.

February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano
Cagayan, Inc. alleges that IMC and LSPI filed their claims under their respective fire insurance policies
which it paid thus it was subrogated to their rights
Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or force
majeure

RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss (res
perit domino)

CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit domino

ISSUE: W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt that
was isnured

HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED

insurance policy is clear that the subject of the insurance is the book debts and NOT goods sold and
delivered to the customers and dealers of the insured

ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at
the buyer's risk whether actual delivery has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of
the contract and the ownership in the goods has been retained by the seller merely to secure
performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from
the time of such delivery;

IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full
payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where
ownership is the basis for consideration of who bears the risk of loss, in property insurance, one's
interest is not determined by concept of title, but whether insured has substantial economic interest in
the property

Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real
or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated
peril might directly damnify the insured." Parenthetically, under Section 14 of the same Code, an
insurable interest in property may consist in: (a) an existing interest; (b) an inchoate interest founded on
existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the
expectancy arises.

Anyone has an insurable interest in property who derives a benefit from its existence or would suffer
loss from its destruction.

it is sufficient that the insured is so situated with reference to the property that he would be liable to
loss should it be injured or destroyed by the peril against which it is insured

an insurable interest in property does not necessarily imply a property interest in, or a lien upon, or
possession of, the subject

matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence of
such an interest
insurance in this case is not for loss of goods by fire but for petitioner's accounts with IMC and LSPI that
remained unpaid 45 days after the fire - obligation is pecuniary in nature

obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true
when the obligation consists in the delivery of a determinate thing and there is no stipulation holding
him liable even in case of fortuitous event

Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or destruction of
anything of the same kind does not extinguish the obligation (Genus nunquan perit)

The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as
insurer and IMC as the insured, but also the amount paid to settle the insurance claim

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract.

As to LSPI, no subrogation receipt was offered in evidence.

Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of
P535,613