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8/9/2016

SUPREME COURT REPORTS ANNOTATED VOLUME 245

268

SUPREME COURT REPORTS ANNOTATED
Sunlife Assurance Company of Canada vs. Court of
Appeals
*

G.R. No. 105135. June 22, 1995.

SUNLIFE ASSURANCE COMPANY OF CANADA,
petitioner, vs. The Hon. COURT OF APPEALS and
Spouses
ROLANDO
and
BERNARDA
BACANI,
respondents.
Evidence; The rule that factual findings of the lower court and
the appellate court are binding on the Supreme Court is not
absolute.—The rule that factual findings of the lower court and
the appellate court are binding on this Court is not absolute and
admits of exceptions, such as when the judgment is based on a
misappreciation of the facts (Geronimo v. Court of Appeals, 224
SCRA 494 [1993]).
Insurance Law; Concealment; Words and Phrases; A neglect to
communicate that which a party knows and ought to communicate
is called concealment.—In weighing the evidence presented, the
trial court concluded that indeed there was concealment and
misrepresenta­
______________
*

FIRST DIVISION.

269

VOL. 245, JUNE 22, 1995

269

Sunlife Assurance Company of Canada vs. Court of Appeals

tion, however, the same was made in “good faith” and the facts
concealed or misrepresented were irrelevant since the policy was
“non­medical.” We disagree. Section 26 of The Insurance Code is
http://www.central.com.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False

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8/9/2016 SUPREME COURT REPORTS ANNOTATED VOLUME 245 explicit in requiring a party to a contract of insurance to communicate to the other. “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. a disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably assess the risk involved in accepting the application. The information which the insured failed to disclose were material and relevant to the approval and issuance of the insurance policy. is untenable. and which the other has no means of ascertaining. that “x x x the waiver of a medical examination [in a non­medical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False 2/8 .—The argument. raises grave doubts about his bona fides. Philippine American Life Insurance Company. Said Section provides: “A neglect to communicate that which a party knows and ought to communicate. for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not x x x. that petitioner’s waiver of the medical examination of the insured debunks the materiality of the facts concealed.—Thus. The insured is specifically required to disclose to the insurer matters relating to his health.” 270 270 SUPREME COURT REPORTS ANNOTATED Sunlife Assurance Company of Canada vs. Moreover. Court of Appeals http://www. Same; Same; Non­Medical Insurance Contracts; The waiver of a medical examination in a non­medical insurance contract renders even more material the information required of the applicant concerning previous condition of health and diseases suffered.—The terms of the contract are clear.central.” Same; Same; Materiality; Matters relating to the health of the insured are material and relevant to the approval and issuance of the life insurance policy as these definitely affect the insurer’s action on the application. The matters concealed would have definitely affected petitioner’s action on his application. in good faith.com. We reiterate our ruling in Saturnino v. It appears that such concealment was deliberate on his part. 7 SCRA 316 (1963). all facts within his knowledge which are material to the contract and as to which he makes no warranty. Same; Same; Good faith is no defense in concealment. is called concealment. either by approving it with the corresponding adjustment for a higher premium or rejecting the same.

Robert John B. Respondent Bernarda Bacani filed a claim with petitioner. CV No. We grant the petition. 1992 of the Court of Appeals in CA­G. the insured died in a plane crash. 56.           Quasha.—Anent the finding that the facts concealed had no bearing to the cause of death of the insured. The designated beneficiary was his mother. No. On June 26. and its Resolution dated April 22. Ancheta. QUIASON.R. PETITION for review on certiorari of a decision of the Court of Appeals. Court of Appeals http://www.central. The facts are stated in the opinion of the Court. JUNE 22. J. I On April 15.00. Peña and Nolasco for petitioner. Bacani procured a life insurance contract for himself from petitioner. 1986. 1995 271 Sunlife Assurance Company of Canada vs. 1987. The Philippine American Life Insurance Co. 271 VOL. Asperilla. respondent Bernarda Bacani. seeking the benefits of the insurance policy taken by her son. Petitioner conducted an investigation and its findings prompted it to reject the claim.000. He was issued Policy No. 245. 3­903­766­X valued at P100.: This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and set aside the Decision dated February 21. 29068. It is sufficient that his non­disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries (Henson v.8/9/2016 SUPREME COURT REPORTS ANNOTATED VOLUME 245 Same; Same; It is well­settled that the insured need not die of the disease he had failed to disclose to the insurer.com.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False 3/8 . O. with double indemnity in case of accidental death. as it is sufficient that his non­disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries.G. 1992. it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. 48 [1960]). denying reconsideration thereof..      Edilberto Balce for private respondent.

thus rendering the contract of insurance voidable. 53). On January 14. 1988. 53). the deceased was subjected to urinalysis. Within the past 5 years have you: a) consulted any doctor or other health practitioner? b) submitted to:      ECG?      X­rays?      blood tests?      other tests? c) attended or been admitted to any hospital or other medical facility? “6. kidney or bladder disorder?” (Rollo. p. the insured was examined and confined at the Lung Center of the Philippines. that the insured did not disclose material facts relevant to the issuance of the policy. The other questions were answered in the negative (Rollo. A check representing the total premiums paid in the amount of P10. The deceased answered question No.172. 1990. On November 17. Valenzuela. for cough and flu complications.8/9/2016 SUPREME COURT REPORTS ANNOTATED VOLUME 245 In its letter. Branch 191. filed an action for specific performance against petitioner with the Regional Trial Court. respondent Bernarda Bacani and her husband. where he was diagnosed for renal failure.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False 4/8 . p. Petitioner claimed that the insured gave false statements in his application when he answered the following questions: “5. Petitioner filed its answer with counterclaim and a list of exhibits consisting of medical records furnished by the Lung Center of the Philippines. Reinaldo D. ultra­sonography and hematology tests. Raymundo of the Chinese General Hospital on February 1986. private respondents filed a “Proposed Stipulation with Prayer for Summary Judgment” http://www. Have you ever had or sought advice for: xxx      xxx      xxx b) urine. respondent Rolando Bacani. petitioner informed respondent Bernarda Bacani. Petitioner discovered that two weeks prior to his application for insurance. Metro Manila.central.00 was attached to said letter.com. 5(a) in the affirmative but limited his answer to a consultation with a certain Dr. During his confinement.

000. judgment is hereby rendered in favor of the plaintiffs and against the defendant.00) and further sum of P5. Moreover. pp. Petitioner 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. Petitioner then moved for a summary judgment and the trial court decided in favor of private respondents. 3903766. “Defendant’s counterclaim is hereby Dismissed” (Rollo.” Petitioner appealed to the Court of Appeals. p.00) the face value of insured’s Insurance Policy No. thereby rendering an admission of the matters alleged. pp. 4­5). it held that the health history of the insured was immaterial since the insurance policy was “non­medical. In ruling for private respondents. condemning the latter to pay the former the amount of One Hundred Thousand Pesos (P100.000. the trial court concluded that the facts concealed by the insured were made in good faith and under a belief that they need not be disclosed. It also sustained the finding of the trial court that matters relating to the health history of the insured were irrelevant since petitioner waived the medical examination prior to the approval and issuance of the insurance policy. Moreover. The dispositive portion of the decision is reproduced as follows: “WHEREFORE. Private respondents failed to oppose said request or reply thereto.central. Court of Appeals evidence of concealment/misrepresentation by the decedent of his health condition” (Rollo. http://www.000. 62). The appellate court ruled that petitioner cannot avoid its obligation by claiming concealment because the cause of death was unrelated to the facts concealed by the insured. and the Accidental Death Benefit in the amount of One Hundred Thousand Pesos (P100.com. the appellate court agreed with the trial court that the policy was “non­ medical” (Rollo. which affirmed the decision of the trial court.8/9/2016 SUPREME COURT REPORTS ANNOTATED VOLUME 245 where they 272 272 SUPREME COURT REPORTS ANNOTATED Sunlife Assurance Company of Canada vs.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False 5/8 . 43­ 44).00 in the concept of reasonable attorney’s fees and costs of suit.

245. in forming his estimate of the disadvantages of the proposed contract or in making his inquiries (The Insurance Code. The information which the insured failed to disclose were material and relevant to the approval and issuance of the insurance policy.com. in good faith. 31). Court of Appeals II We reverse the decision of the Court of Appeals.central. JUNE 22. is called concealment.8/9/2016 SUPREME COURT REPORTS ANNOTATED VOLUME 245 Petitioner’s motion for reconsideration was denied; hence. The rule that factual findings of the lower court and the appellate court are binding on this Court is not absolute and admits of exceptions. 224 SCRA 494 [1993]). In weighing the evidence presented. 273 VOL. the trial court concluded that indeed there was concealment and misrepresentation. The terms of the contract are clear. a disclosure may have warranted a medical examination of http://www. 1995 273 Sunlife Assurance Company of Canada vs. such as when the judgment is based on a misappreciation of the facts (Geronimo v.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False 6/8 . The insured is specifically required to disclose to the insurer matters relating to his health. this petition. Moreover. all facts within his knowledge which are material to the contract and as to which he makes no warranty. however. either by approving it with the corresponding adjustment for a higher premium or rejecting the same. and which the other has no means of ascertaining. the same was made in “good faith” and the facts concealed or misrepresented were irrelevant since the policy was “non­medical. Said Section provides: “A neglect to communicate that which a party knows and ought to communicate.” We disagree.” 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. Section 26 of The Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other. Court of Appeals. Sec. The matters concealed would have definitely affected petitioner’s action on his application.

The Philippine American Life Insurance Co. 7 SCRA 316 (1963). Court of Appeals depend on the actual or physical events which ensue. Court of Appeals. therefore. We reiterate our ruling in Saturnino v. we held that materiality of the information withheld does not depend on the state of mind of the insured. raises grave doubts about his bona fides. Anent the finding that the facts concealed had no bearing to the cause of death of the insured. Court of Appeals. It must be emphasized that rescission was exercised within the two­ http://www. for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not x x x. Neither does it 274 274 SUPREME COURT REPORTS ANNOTATED Sunlife Assurance Company of Canada vs. supra). 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 (Henson v. de Canilang v. is untenable. that “x x x the waiver of a medical examination [in a non­medical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered. 48 [1960]).com. Philippine American Life Insurance Company. It appears that such concealment was deliberate on his part. We.G.” Moreover. “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. which allows the injured party to rescind a contract of insurance where there is concealment. Thus. The argument. rule that petitioner properly exercised its right to rescind the contract of insurance by reason of the concealment employed by the insured. No. In Vda. de Canilang v.8/9/2016 SUPREME COURT REPORTS ANNOTATED VOLUME 245 the insured by petitioner in order for it to reasonably assess the risk involved in accepting the application. such argument of private respondents would make Section 27 of the Insurance Code. 223 SCRA 443 (1993). that petitioner’s waiver of the medical examination of the insured debunks the materiality of the facts concealed.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False 7/8 . ineffective (See Vda.central. 56 O. it is well settled that the insured need not die of the disease he had failed to disclose to the insurer.

the petition is GRANTED and the Decision of the Court of Appeals is REVERSED and SET ASIDE. 211 SCRA 879 [1992]) As it is also a contract of adhesion. Bellosillo and Kapunan.—The terms of the contract constitute the measure of the insurer’s liability. SO ORDERED. All rights reserved. Jr. 275 VOL.central. WHEREFORE.           Padilla (Chairman). (Verendia vs. Japson.ph/sfsreader/session/000001566f1fa63e1bd54aed003600fb002c009e/t/?o=False 8/8 .. http://www. an insurance contract should be liberally construed in favor of the insured and strictly against the insurance company. Inc.8/9/2016 SUPREME COURT REPORTS ANNOTATED VOLUME 245 year contestability period as recognized in Section 48 of the Insurance Code.com. Davide. Notes. concur. Court of Appeals. JJ. 1995 275 People vs. assailed judgment reversed and set aside. (Paramount Insurance Corporation vs.. 245. Canturia Petition granted. 217 SCRA 417 [1993]) ———o0o——— © Copyright 2016 Central Book Supply. JUNE 22.