[ G.R. No.

199683, February 10, 2016 ]

ARLENE T. SAMONTE, et al., petitioners, vs. LSGH, BRO. BERNARD S. OCA, respondents.

FACTS:
From 1989, La Salle Greenhills, Inc. (LSGI) contracted the services of medical professionals, specifically
pediatricians, dentists and a physician, to comprise its Health Service Team (HST). Petitioners, along with
other members of the HST signed uniform one-page Contracts of Retainer for the period of a specific
academic cal~ndar beginning in June of a certain year (1989 and the succeeding 15 years) and
terminating in March of the following year when the school year ends. After fifteen consecutive years of
renewal each academic year, where the last Contract of Retainer was for the school year of 2003-2004,
LSGI Head Administrator, on that last day of the school year, informed the Medical Service Team,
including herein petitioners, that their contracts will no longer be renewed for the following school year by
reason of LSGI's decision to hire two (2) full-time doctors and dentists. When petitioners', along with their
medical colleagues', requests for payment of their separation pay were denied, they filed a complaint for
illegal dismissal with prayer for separation pay, damages and attorney's fees before the NLRC. They
alleged that they were regular employees who could only be dismissed for just and authorized causes
LSGI denied that complainants were regular employees, asserting: that complainants were independent
contractors who were retained by LSGI by reason of their medical skills and expertise to provide ancillary
medical and dental services; that LSGI had no power to impose disciplinary measures upon complainants
including dismissal from employment; and that LSGI had no power of control over how complainants
actually performed their professional services.
The LA dismissied petitioners complaint, but the NLRC reversed. On appeal, the CA ruled against
petitioners.
ISSUE:
Whether or not the CA correctly ruled that the NLRC did not commit grave abuse of discretion in ruling
that petitioners were not regular employees who may only be dismissed for just and authorized causes.
RULING:
NO. In the case at bar, the CA disregarded the repeated renewals of the Contracts of Retainer of
petitioners spanning a decade and a half. While vague in its sparseness, the Contract of Retainer very
clearly spelled out that LSGI had the power of control over petitioners. It is enough that the employer has
the right to wield that power. In all, given the following: ( 1) repeated renewal of petitioners' contract for
fifteen years, interrupted only by the close of the school year; (2) the necessity of the work performed by
petitioners as school physicians ~and dentists; and (3) the existence of LSGI's power of control over the
means and method pursued by petitioners in the performance of their job, we rule that petitioners attained
regular employment, entitled to security of tenure who could only be dismissed for just and authorized
causes. Consequently, petitioners were illegally dismissed and are entitled to the twin remedies of
payment of separation pay and full back wages. We order separation pay in lieu of reinstatement given
the time that has lapsed, twelve years, in the litigation of this case.
Petition granted.

PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF

APPEALS
G.R. No. 125678, March 18, 2002 (YNARES-SANTIAGO, J.)
FACTS:
Ernani Trinos applied for a health care coverage with Philamcare Health Systems, Inc. To the
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?, Ernani answered
No. Under the agreement, Ernani is entitled to avail of hospitalization benefits and out-patient
benefits. The coverage was approved for a period of one year from March 1, 1988 to March 1,
1989. The agreement was however extended yearly until June 1, 1990 which increased the
amount of coverage to a maximum sum of P75,000 per disability.
During the period of said coverage, Ernani suffered a heart attack and was confined at the Manila
Medical Center (MMC) for one month. While in the hospital, his wife Julita tried to claim the
benefits under the health care agreement. However, the Philamcare denied her claim alleging that
the agreement was void because Ernani concealed his medical history. Doctors at the MMC
allegedly discovered at the time of Ernanis confinement that he was hypertensive, diabetic and
asthmatic, contrary to his answer in the application form. Thus, Julita paid for all the
hospitalization expenses.
After Ernani 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,
respondent brought her husband home again. In the morning of April 13, 1990, Ernani had fever
and was feeling very weak. Respondent was constrained to bring him back to the Chinese
General Hospital where he died on the same day.
Julita filed an action for damages and reimbursement of her expenses plus moral damages
attorneys fees against Philamcare and its president, Dr. Benito Reverente. The Regional Trial
court or Manila rendered judgment in favor of Julita. On appeal, the decision of the trial court
was affirmed but deleted all awards for damages and absolved petitioner Reverente. Hence, this
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.
ISSUES:
(1) Whether or not the health care agreement is not an insurance contract
(2) Whether or not there is concealment of material fact made by Ernani
HELD:

(1)YES. Section2 (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.
Section 3 of the Insurance Code states that any contingent or unknown event, whether past or
future, which my damnify a person having an insurable 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.
The insurable interest of respondents 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.
(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 I good faith and without intent to deceive will not avoid a policy even
though they are untrue.
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, petitioner is liable for claims made under the contract. Having assumed a
responsibility under the agreement, petitioner is bound to answer 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 wherever he avails of the covered benefits which
he has prepaid.
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.