Sunlife Assurance Company of Canada v.

Court of Appeals
G.R. 105135 – June 22, 1995
J. Quiason

Topic: Rescission of Insurance Contracts – Concealment and Misrepresentation

Doctrine: Defense of good faith is not applicable for concealment + It is immaterial whether the cause of
death was not due to a concealed information during the application [e.g. concealed health issues, but died
from an accident]

Petitioners: Sunlife Assurance Company of Canada

Respondents: Court of Appeals, Spouses Rolando and Bernarda Bacani

Insurer Sunlife Assurance Company of Canada

Insured Robert John B. Bacani (Son of Respondents)
Life Insurance (valued PHP100,000 with double indemnity in case of
Insurance Product/s
accidental death) with Bernarda Bacani as the beneficiary.
Date Purchased
Petition filed
E.g. Andres Cortes died. Insurance Plus denied the death claim filed by Maria
Cause of action on the ground that the premium payment was not fully paid when Andres
died.

Case Summary: Robert Bacani (son of respondents) applied for a life insurance, but concealed he was
diagnosed with renal failure. He died from a plane crash, and now the beneficiary (Bernarda) is claiming
the benefits. RTC and CA ruled in favor of the spouses, saying that the concealment was made in good
faith and that the cause of death was unrelated to the concealed information anyway. SC reverses the CA
ruling categorically stating that there could be no good faith in concealment given that the terms were
clear that all matters relating to health should be disclosed. SC also ruled that it is immaterial whether
the cause of death was not due to the concealed info. The insurer might not have even granted the
application had it known about the renal failure diagnosis.

Facts:
 Robert Bacani procured a life insurance with Sunlife (valued PHP100,000 with double indemnity
in case of accidental death) with Bernarda Bacani, his mother, as the beneficiary.
 June 26, 1987: Robert Bacani]) died in a plane crash. Subsequently, Bernarda, is seeking the
benefits of the insurance policy. Sunlife rejected the claim stating that Robert did not disclose
material facts relevant to the issuance of the policy, rendering the contract voidable. Spouses
Bacani filed an action for specific performance.
 Sunlife said that when asked about his health (i.e. Within the past 5 years have you consulted any
doctor? and Have you ever had or sought advice for urine, kidney or bladder disorder?), Robert
did not disclose the fact that 2 weeks prior applying for the insurance, he was hospitalized and
diagnosed for renal failure.
 RTC Valenzuela: Ruled in favor of the spouses. RTC said that the facts concealed were made in
good faith and under the belief that they need not be disclosed. Moreover, it held that the health
history of the insured was immaterial since the insurance policy was non-medical.
 Court of Appeals: Affirmed RTC decision. Sunlife cannot avoid its obligation by claiming
concealment because the cause of death was unrelated to the facts concealed by the insured.

Issues + Held: W/N the Insurance Contract is valid [NO. SC reversed the CA’s Ruling]
  On defense of good faith: This cannot be appreciated since the terms of the contract are clear. The
insured is specifically required to disclose to the insurer matters relating to his health. The matters
concealed would have affected the application, either by approving it with a higher premium or
rejecting it altogether.
 On petitioner’s waiving the need for a medical exam: This was based on Robert’s answer, which
Sunlife took as true. If Robert answered truthfully the questions in the application, Sunlife would
have asked for a medical exam.
 On relation of the disease and the accident: 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.

Ruling: WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals is
REVERSED and SET ASIDE.

Dissent – (J. xxx):