Case Digest: Philamcare vs. Court of Appeals and Trinos

PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS and JULITA TRINOS

G.R. No. 125678; 18 March 2002

Facts:

Ernani Trinos, deceased husband of private respondent Julita Trinos, was approved for a health care coverage with petitioner from March 1988 to March1989. The same was extended twice until June 1990. During the period of his coverage, Ernani was hospitalized several times, however, petitioner denied the claim of private respondent because the Health Care Agreement was allegedly void due to the alleged concealment of Ernani that he was not hypertensive, diabetic, and asthmatic, contrary to his answer in the application form.

Petitioner argues that the agreement merely granted living benefits, such as check-ups and hospitalisation, hence it is not an insurance contract. Petitioner further argues that it is not an insurance company, which is governed by the Insurance Commission, but a Health Maintenance Organization under the authority of the Department of Health.

Issues:

1. Whether or not the Health Care Agreement between the deceased and the petitioner falls under the ambit of an insurance contract.
2. Whether the alleged concealment of the deceased will invalidate the Agreement.

Ruling:

1. Yes. In the case at bar, the insurable interest of respondents husband in obtaining the health care agreement was his own health. Section 10 of the Insurance Code is clear that every person has an insurable interest in the life and health of himself.  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
2. No. The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondents husband who was not a medical doctor. 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. (A)lthough 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. 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.