Bernardo Argente vs West Coast Life Insurance Company

In February 1925, Bernardo Argente and his wife applied for a joint life insurance under West Coast Life
Insurance Company (West Coast). The couple was examined by the insurance company doctor (Doctor
Sta. Ana). The couple disclosed to the doctor that they never had any serious medical histories; that they
were never confined; that Vicenta De Ocampo (wife of Argente) was not an alcoholic. Doctor Sta. Ana
then recommended the approval of the application. In May 1925, the couple were issued with the
insurance policy. In November 1925, Vicenta died. West Coast Life denied the subsequent insurance
claim filed by Argente as it averred that the application made in June was attended by fraud because the
couple failed to disclose the fact that each of them were actually confined prior to their application; that
Vicenta in particular was diagnosed for alcoholism and ultimately for psycho-neurosis; that in sum, their
statement as to their health and previous illnesses within the last 5-7 years prior to their application
were untrue.

Argente conceded to the allegations of West Coast however he stated that those facts were actually
disclosed to Dr. Sta. Ana however Dr. Sta. Ana connived with the insurance agent hence he failed to
record them in the medical reports. Further, Argente averred that if West Coast did have the right to
rescind the insurance, it should have done so prior to the filing of a suit involving the insurance claim.

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

HELD: No. In an action on a life insurance policy where the evidence conclusively shows that the answers
to questions concerning diseases were untrue, the truth or falsity of the answers become the
determining factor. If the policy was procured by fraudulent representations, the contract of insurance
apparently set forth therein was never legally existent. It can fairly be assumed that had the true facts
been disclosed by the assured, the insurance would never have been granted. The allegations of Argente
do not have a leg to stand on, Dr. Sta. Ana has no motive whatsoever and such alleged illicit act will only
destroy his reputation as a physician.

As to the allegation of Argente regarding the failure of West Coast to rescind the insurance prior to the
filing of this case, there are two answers:

1. The failure of West Coast to rescind the contract cannot prejudice any defense to the suit which
concealment may furnish.

2. Prior to the filing of this case, West Coast sent a notice to Argente advising him that the policy is being
canceled due to the concealment and that his premium is being refunded – this operates as a rescission
to the contract of insurance.
Great Pacific Life Assurance Company vs Court of Appeals (1979)

In March 1957, Ngo Hing filed an application for a 20-year endowment policy for the life of his one-year
old daughter with the Great Pacific Life Assurance Company (Grepalife). Lapulapu Mondragon was the
insurance agent who assisted Ngo Hing. The insurance policy was for P50,000.00. The proper form was
filled out and Ngo Hing paid the insurance premium. He received a binding deposit receipt in return.
Said receipt however was subject to certain conditions, among which is the acceptance of Grepalife.

Grepalife eventually denied the insurance application because the endowment plan by Grepalife is not
offered for minors below seven years old. Grepalife, instead made a counter-offer which Ngo Hing failed
to accept because Mondragon, instead of communicating the said denial to Ngo Hing, wrote a letter to
Grepalife trying to convince Grepalife to allow one-year olds to be covered by endowment plans.

In May 1957, Ngo Hing’s one-year old daughter died. Ngo Hing tried to collect the insurance claim but
Grepalife refused as it claimed that the insurance contract was never perfected sans their acceptance.

ISSUE: Whether or not Grepalife should pay the insurance claim.

HELD: No. As properly ruled by the lower court as well as the Court of Appeals, the insurance contract
was never completed because Grepalife never accepted the insurance offer. The binding deposit receipt
issued to Ngo Hing is only acknowledgement of his application and receipt of his payment for the
insurance premium.

The Supreme Court also noted that Ngo Hing failed to disclose the fact that his one-year old daughter
was a mongoloid. Such congenital defect was withheld by Ngo Hing with bad faith and such risk to be
assumed by the insurance company.

The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and
perfect candor or openness and honesty; the absence of any concealment or demotion, however slight
not for the insured alone but equally so for the insurer. Concealment is a neglect to communicate that
which a party knows and ought to communicate. Whether intentional or unintentional the concealment
entitles the insurer to rescind the contract of insurance.
Estefania Saturnino vs The Philippine American Life Insurance Company

In September 1957, Estefania Saturnino was operated for cancer in which her right breast was removed.
She was advised by her surgeon that she’s not totally cured because her cancer was malignant. In
November 1957, she applied for an insurance policy under Philamlife (Philippine American Life
Insurance Company). She did not disclose the fact that she was operated nor did she disclose any
medical histories. Philamlife, upon seeing the clean bill of health from Estefania waived its right to have
Estefania undergo a medical checkup. In September 1958, Estefania died of pneumonia secondary to
influenza. Her heirs now seek to enforce the insurance claim.

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

HELD: No. The concealment of the fact of the operation is fraudulent. Even if, as argued by the heirs,
Estefania never knew she was operated for cancer, there is still fraud in the concealment no matter
what the ailment she was operated for. Note also that in order to avoid a policy, it is not necessary that
actual fraud be established otherwise insurance companies will be at the mercy of any one seeking
insurance.

In this jurisdiction a concealment, whether intentional or unintentional, entitles the insurer to rescind
the contract of insurance, concealment being defined as “negligence to communicate that which a party
knows and ought to communicate.”

Also, the fact that Philamlife waived its right to have Estefania undergo a medical examination is not
negligence. Because of Estefania’s concealment, Philamlife considered medical checkup to be no longer
necessary. Had Philamlife been informed of her operation, she would have been made to undergo
medical checkup to determine her insurability.
Vda Canilang v CA G.R. No. 92492 June 17, 1993

Facts:
Canilang was found to have suffered from sinus tachycardia then bronchitis after a check-up from his
doctor. The next day, he applied for a "non-medical" insurance policy with respondent Grepalife naming
his wife, Thelma Canilang, as his beneficiary. This was to the value of P19,700.
He died of "congestive heart failure," "anemia," and "chronic anemia." The widow filed a claim with
Great Pacific which the insurer denied on the ground that the insured had concealed material
information from it.
Petitioner then filed a complaint against Great Pacific for recovery of the insurance proceeds. Petitioner
testified that she was not aware of any serious illness suffered by her late husband and her husband had
died because of a kidney disorder. The doctor who gave the check up stated that he treated the
deceased for “sinus tachycardia” and "acute bronchitis."
Great Pacific presented a physician who 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.
The Insurance Commissioner ordered Great Pacific to pay P19,700 plus legal interest and P2,000.00 as
attorney's fees. On appeal by Great Pacific, the Court of Appeals reversed. It found that the failure of
Jaime Canilang to disclose previous medical consultation and treatment constituted material
information which should have been communicated to Great Pacific to enable the latter to make proper
inquiries.
Hence this petition by the widow.

Issue: Won Canilang was guilty of misrepresentation

Held: Yes. Petition denied.

Ratio:
There was a right of the insurance company to rescind the contract if it was proven that the insured
committed fraud in not affirming that he was treated for heart condition and other ailments stipulated.
Apart from certifying that he didn’t suffer from such a condition, Canilang also failed to disclose in the
that he had twice consulted a doctor who had found him to be suffering from "sinus tachycardia" and
"acute bronchitis."
Under the Insurance Code:
Sec. 26. A neglect to communicate that which a party knows and ought to communicate, is called a
concealment.
Sec. 28. Each party to a contract of insurance must communicate to the other, in good faith, all factors
within his knowledge which are material to the contract and as to which he makes no warranty, and
which the other has not the means of ascertaining.
The information concealed must be information which the concealing party knew and should have
communicated. The test of materiality of such information is contained in Section 31:
Sec. 31. 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 the communication is due, in forming his estimate of the
disadvantages of the proposed contract, or in making his inquiries.
The information which Jaime Canilang failed to disclose was material to the ability of Great Pacific to
estimate the probable risk he presented as a subject of life insurance. Had he disclosed his visits to his
doctor, the diagnosis made and medicines prescribed by such doctor, in the insurance application, it
may be reasonably assumed that Great Pacific would have made further inquiries and would have
probably refused to issue a non-medical insurance policy.
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.
The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain
information to the insurer was not "intentional" in nature, for the reason that Canilang believed that he
was suffering from minor ailment like a common cold. Section 27 stated that:
Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a
contract of insurance.
The failure to communicate must have been intentional rather than inadvertent. Canilang could not
have been unaware that his heart beat would at times rise to high and alarming levels and that he had
consulted a doctor twice in the two (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 ailment.
Canilang's failure to set out answers to some of the questions in the insurance application constituted
concealment.

SUNLIFE ASSURANCE COMPANY OF CANADA vs. COURT OF APPEALS G.R. No. 105135, 22 June 1995

FACTS:

Robert John Bacani procured a life insurance contract for himself from petitioner-company, designating
his mother Bernarda Bacani, herein private respondent, as the beneficiary. He was issued a policy valued
at P100,000.00 with double indemnity in case of accidental death. Sometime after, the insured died in a
plane crash. Bernarda filed a claim with petitioner, seeking the benefits of the insurance policy taken by
her son. However, said insurance company rejected the claim on the ground that the insured did not
disclose material facts relevant to the issuance of the policy, thus rendering the contract of insurance
voidable. Petitioner 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.
The RTC, as affirmed by the CA, this fact was concealed, as alleged by the petitioner. But the fact that
was concealed was not the cause of death of the insured and that matters relating to the medical
history of the insured is deemed to be irrelevant since petitioner waived the medical examination prior
to the approval and issuance of the insurance policy.

ISSUE: Whether or not the concealment of such material fact, despite it not being the cause of death of
the insured, is sufficient to render the insurance contract voidable

HELD:

YES. 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.
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. The SC, therefore, ruled that petitioner properly exercised its right to
rescind the contract of insurance by reason of the concealment employed by the insured. It must be
emphasized that rescission was exercised within the two-year contestability period as recognized in
Section 48 of The Insurance Code. WHEREFORE, the petition is GRANTED and the Decision of the Court
of Appeals is REVERSED and SET ASIDE.

Yu v CA G.R. No. L-12465 May 29, 1959

J. Bautista

Facts:
Yu Pang Eng submitted application for insurance consisting of the medical declaration made by him to
the medical examiner and the report. Yu then paid the premium in the sum of P591.70.
The insured, in his application for insurance, said “no” to ever having stomach disease, cancer, and
fainting-spells. He also claimed to not have consulted a physician regarding such diseases.
After submitting the form, he entered the hospital where he complained of dizziness, anemia,
abdominal pains and tarry stools. He was found to have peptic ulcer.
The insured entered another hospital for medical treatment but he died of "infiltrating medullary
carcinoma, Grade 4, advanced cardiac and of lesser curvature, stomach metastases spleen."
Yu Pang Cheng aimed to collect P10,000.00 on life of one Yu Pang Eng from an insurance company.
The company set up the defense that the insured was guilty of misrepresentation and concealment of
material facts. They subsequently refused to give the indemnity.
The trial court rendered judgment ordering defendant to pay plaintiff the sum of P10,000.00, plus
P2,000.00 as attorney's fees. The Court of Appeals reversed the decision of the trial court, holding that
the insured was guilty of concealment of material facts. Hence the present petition.

Issue: Whether or not the insured is guilty of concealment of some facts material to the risk insured that
consequently avoids the policy.

Held: Yes. Petition dismissed.

Ratio:
The first confinement took place from January 29, 1950 to February 11, while his application was
submitted on September 5, 1950. When he gave his answers to the policy, he concealed the ailment of
which he was treated in the hospital.
The negative answers given by the insured regarding his previous ailment deprived defendant of the
opportunity to make the necessary inquiry as to the nature of his past illness so that as it may form its
estimate relative to the approval of his application. Had defendant been given such opportunity, the
company would probably had never consented to the issuance of the policy in question. In fact,
according to the death certificate, the insured’s death may have direct connection with his previous
illness.
Under the law, a neglect to communicate that which a party knows and ought to communicate, is called
concealment. This entitles the insurer to rescind the contract. The insured is required to communicate
to the insurer all facts within his knowledge which are material to the contract and which the other
party has not the means of ascertaining. The 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 the communication is
due.
Argente vs. West Coast- “One ground for the rescission of a contract of insurance under the insurance
Act is "a concealment", which in section 25 is defined "A neglect to communicate that which a party
knows and ought to communicate."
“In an action on a life insurance policy where the evidence conclusively shows that the answers to
questions concerning diseases were untrue, the truth or falsity of the answers become the determining
factor. If the policy was procured by fraudulent representations, the contract of insurance was never
legally existent. It can fairly be assumed that had the true facts been disclosed by the assured, the
insurance would never have been granted.”

Ng Gan Zee vs Asian Crusader Life Assurance Corporation

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.

Colado v. Insular Life - Tender of Overdue Payments

51 OG (No 12) 6269

Facts:
> Vivencio Collado applied for an insurance contract with Insular life in 1948. His application was
approved and he began started making premium payments. However, he defaulted and the insurance
was cancelled.

> He then applied for the reinstatement of his insurance policy in Nov. of 1951 and tendered the
amount of premium for the years 1950-1951.

> He stated that he was as of Nov. 1951 of good health, and that he had no injuries, ailments or
illnesses and had not been sick for any case since 1948 (his medical check up when he applied for
insurance) and that he had not consulted any physician or practitioner for any case since the date of
such latest medical exam.

> However, when Vivencio applied for the reinstatement, he was already sick of a fatal disease known
as carcinoma of the liver and that 4 days prior to his application for insurance, he consulted a doctor
regarding his condition.

> The reinstatement was approved. Vivencio again failed to pay the premiums for the last quarter of
Nov. 1951 and as such, Insular life sent him a notice canceling the policy.

> Vivencio then died. The beneificiaries instituted the present action to recover from Insular life the
death benefits of a life insurance policy valued at 2T. Insular refused to pay claiming concealment on
the part of Vivencio.

> Collado contends that Insular life had waived the right to rescine the policy in view of its repeated
acceptance of the overdue premiums for the second and third years.

> Municipal court of Manila found for Collado and Insular filed an appeal with CFI of Manila. CFI
rendered judgment in favor of Insular and dismissed Collado’s complaint.

Issue:

Whether or nor Insular life was estopped and could no longer cancel the contract due to the fact that it
accepted the tender of overdue payments from Vivencio.

Held:
NO.
It is enormously clear that when the deceased applied for a reinstatement of his policy in Nov. 1951, he
had already been afflicted with the fatal ailment for a period of about four months. Furthermore, in
submitting together with his application for reinstatement, a health statement to the effect that he was
in good health, Vivencio concealed the material fact that he had consulted a doctor and was then found
to be afflicted with the malady.

The acceptance of Insular life of the overdue premiums did not necessarily deprive it of the right to
cancel the policy in case of default incurred by the Insured in the payment of future premiums. The case
would be different had the insured died at any time after the payment of overdue premiums but
previous to the reinstatement of the policy, for the, Insular, by its acceptance of its overdue premiums is
deemed to have waived its right to rescind the policy.

The evidence at hand shows that insofar as the payment of the last quarterly premium for 1951 was
concerned, Insular had availed of the right to rescind the policy by notifying the Insured that the policy
had lapsed.