D.

CONCEALMENT
Section 32 of Insurance Code
Concealment - A neglect to communicate that which a party knows and ought to Each party to a contract of insurance is bound to know all the general causes which
communicate. are open to his inquiry, equally with that of the other, and which may affect the
political or material perils contemplated; and all general usages of trade.
The effect of the concealment makes the insurance policy void because there is no
meeting of the minds. Section 33 of Insurance Code
The right to information of material facts may be waived, either by the terms of the
Section 26 of Insurance Code insurance or by neglect to make inquiry as to such facts, where they are distinctly
A neglect to communicate that which a party knows and ought to communicate, is implied in other facts of which information is communicated.
called a concealment.
Section 34 of Insurance Code
Section 27 of Insurance Code Information of the nature or amount of the interest of one insured need not be
A concealment whether intentional or unintentional entitles the injured party to communicated unless in answer to an inquiry, except as prescribed by section fifty-
rescind a contract of insurance. one.

Section 28 of Insurance Code Section 35 of Insurance Code

Each party to a contract of insurance must communicated to the other, in good faith, Neither party to a contract of insurance is bound to communicate, even upon inquiry,
all facts within his knowledge which are material to the contract and as to which he information of his own judgment upon the matters in question.
makes no warranty, and which the other has not the means of ascertaining.

Section 29 of Insurance Code

An intentional and fraudulent omission, on the part of one insured, to communicate
information of matters proving or tending to prove the falsity of a warranty, entitles
the insurer to rescind.

Section 30 of Insurance Code

Neither party to a contract of insurance is bound to communicate information of
the matters following, except in answer to the inquiries of the other:
(a) Those which the other knows;
(b) Those which, in the exercise of ordinary care, the other ought to know,
and of which the former has no reason to suppose him ignorant;
(c) Those of which the other waives communication;
(d) Those which prove or tend to prove the existence of a risk excluded
by a warranty, and which are not otherwise material; and
(e) Those which relate to a risk excepted from the policy and which are
not otherwise material.

Section 31 of Insurance Code

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.

1
ARGENTE vs. WEST COAST LIFE
Doctrine:
One ground for the rescission of a contract of insurance under the
Insurance Act is "a concealment," which in section 25 is defined as "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 of falsity of the answers
becomes 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.
Facts:
 When Vicenta de Ocampo died of cerebral apoplexy, Bernardo Argente, her
husband and plaintiff herein presented a claim to the respondent insurance
company for the payment of the amount of the joint life Insurance policy applied
for by the spouses.
 Following investigation conducted by the Manager of the Manila office of the
insurance company, it was apparently disclosed that the answers given by the
insured in their medical examinations with regard to their health and previous
illness and medical attendance were untrue. For that reason, the West Coast
Life Insurance Co. refused to pay the claim of Bernardo Argente wrote him to
the effect that the claim was rejected because the insurance was obtained
through fraud and misrepresentation.
 All the information contained in the applications was furnished the agent by
Bernardo Argente.
 It is admitted that it appears in the Medical Examiner's Report that Bernardo
Argente, in response to the question asked by the medical examiner, "Have you
ever consulted a physician for, or have you ever suffered from any ailment or
disease of, the brain or nervous system?" answered "No."
 And to the question, "What physician or physicians, if any, not named above,
have you consulted or been treated by, within the last five years and for what
illness or ailment? (If none, so state)" answered "No." It is, however, not
disputed that on January 10, 11, and 13, 1923, Bernardo Argente was confined
in the Philippine General Hospital where he was treated by Dr. Agerico B. M.
Sison for cerebral congestion and Bell's Palsy.
 It is further admitted that it appears in the Medical Examiner's Report that
Vicenta de Ocampo, in response to the question asked by the medical
examiner, "How frequently, if at all, and in what quantity do you use beer, wine,
spirits or other intoxicants?" answered "Beer only in small quantities
occasionally." To the question, "Have you ever consulted a physician for or have
you ever suffered from any ailment or disease of the brain or nervous system?"
answered "No." To the question, "What physician or physicians, if any, not
named above, have you consulted or been treated by, within the last five years
and for what illness or ailment? (If none, so state)" answered "None." And to the
question, "Are you in good health as far as you know and believe?" answered
"Yes." It is, however, not disputed that Vicenta de Ocampo was taken by a
patrolman, at the request of her husband, Bernardo Argent to the Meisic police
station, and from there was transferred to the San Lazaro Hospital. Her case
was diagnosed by the admitting physician as "alcoholism," but later Doctor
Domingo made a diagnosis of probable "manic-depressive psychosis," and still,
later in Mary Chiles Hospital, made a final diagnosis of "phycho-neurosis."
 The trial court ruled in favor of the insurance company and found that the
spouses gave false information to the doctor with regard to their health.
Issue: Whether or not there is concealment in the present case, hence plaintiff may
not claim from the respondent insurance company?
Held: Yes, there is concealment in the present case, hence plaintiff may not claim
from the respondent insurance company.
Ratio:
 YES. One ground for the rescission of a contract of insurance under the
Insurance Act is "a concealment," which in section 25 is defined as "A neglect
to communicate that which a party knows and ought to communicate." Plaintiff
argues that the alleged concealment was immaterial and insufficient to avoid
the policy. The Court did not agree.
 The Law of Insurance, second edition, volume 3, Chapter LV, is found the
following:
 Concealment exists where the assured has knowledge of a fact material to the
risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assured, but he designated and intentionally with holds
the same.
 Another rule is that if the assured undertakes to state all the circumstances
affecting the risk, a full and fair statement of all is required.
 It is also held that the concealment must, in the absence of inquiries, be not only
material, but fraudulent, or the fact must have been intentionally withheld; so it
2
 is held under English law that if no inquiries are made and no fraud or design to
conceal enters into the concealment the contract is not avoided.
o And it is determined that even though silence may constitute
misrepresentation or concealment it is not itself necessarily so as it is
a question of fact. Nor is there a concealment justifying a forfeiture
where the fact of insanity is not disclosed no questions being asked
concerning the same. . . .
 But it would seem that if a material fact is actually known to the assured, its
concealment must of itself necessarily be a fraud, and if the fact is one which
the assured ought to know, or is presumed to know, the presumption of
knowledge ought to place the assured in the same position as in the former
case with relation to material facts; and if the jury in such cases find the fact
material, and one tending to increase the risk, it is difficult to see how the
inference of a fraudulent intent or intentional concealment can be avoided.
notwithstanding this general rule it will not infrequently happen, especially in life
risks, that the assured may have a knowledge actual or presumed of material
facts, and yet entertain an honest belief that they are not material. . . .
 The determination of the point whether there has or has not been a material
concealment must rest largely in all cases upon the form of the questions
propounded and the exact terms of the contract. Thus, where in addition to
specifically named diseases the insured was asked whether he had any
sickness within ten years, to which he answered "No," and it was proven that
within that period he had a slight of pharyngitis, it was held a question properly
for the jury whether such an inflammation of the throat was a "sickness" within
the intent of the inquiry.
Dispositive:
Respondents won. Trial Court judgment affirmed.

 And it is declared that if a material fact concealed by assured it is equivalent to

a false representation that it does not exist and that the essentials are the truth
of the representations whether they were intended to mislead and did insurer
accept them as true and act upon them to his prejudice. So it is decided that
under a stipulation voiding the policy for concealment or misrepresentation of
any material fact or if his interest is not truly stated or is either than the sole and
unconditional ownership the facts are unimportant that insured did not intend to
deceive or withhold information as to encumbrances even though no questions
were asked.

 And if insured while being examined for life insurance and knowing that she had
heart disease, falsely stated that she was in good health, and though she could
not read the application, it was explained to her and the questions asked
through an interpreter, and the application like the policy contained and
provision that no liability should be incurred unless the policy was delivered
while the insured was in good health, the court properly directed a verdict for
the insurer, though a witness who was present at the examination testified that
the insured was not asked whether she had heart disease.
 The basis of the rule vitiating the contract in case of concealment is that it
misleads or deceives the insurer into accepting the risk, or accepting it at the
rate of premium agreed upon. The insurer, relying upon the belief that the
assured will disclose every material within his actual or presumed knowledge,
is misled into a belief that the circumstance withheld does not exist, and he is
thereby induced to estimate the risk upon a false basis that it does not exist.

 If the assured has exclusive knowledge of material facts, he should fully and
fairly disclose the same, whether he believes them material or not. But

3
 GREAT PACIFIC V COURT OF APPEALS
Doctrine:
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. Concealment is a neglect
to communicate that which a party knows and ought to communicate (Section 25,
Act No. 2427). Whether intentional or unintentional the concealment entitles the
insurer to rescind the contract of insurance Private respondent appears guilty
thereof.
Facts:
o Ngo Hing filed an application with the Great Pacific for a twenty-year
endowment policy in the amount of P50,000.00 on the life of his one-year old
daughter Helen Go. He supplied the essential data which petitioner Mondragon,
the Branch Manager, wrote on the form.
o The latter paid the annual premium the sum of P1,077.75 going over to the
Company, but he retained the amount of P1,317.00 as his commission for being
a duly authorized agent of Pacific Life. Upon the payment of the insurance
premium, the binding deposit receipt was issued Ngo Hing. Likewise, petitioner
Mondragon handwrote at the bottom of the back page of the application form
his strong recommendation for the approval of the insurance application.
o Then, Mondragon received a letter from Pacific Life disapproving the insurance
application. The letter stated that the said life insurance application for 20-year
endowment plan is not available for minors below seven years old, but Pacific
Life can consider the same under the Juvenile Triple Action Plan, and advised
that if the offer is acceptable, the Juvenile Non-Medical Declaration be sent to
the company.
o The non-acceptance of the insurance plan by Pacific Life was allegedly not
communicated by petitioner Mondragon to private respondent Ngo Hing.
Instead, on May 6, 1957, Mondragon wrote back Pacific Life again strongly
recommending the approval of the 20-year endowment insurance plan to
children, pointing out that since the customers were asking for such coverage.
o Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of
the insurance, but having failed in his effort, he filed the action for the recovery
before the Court of First Instance of Cebu, which ruled against him.
 They are trying to figure out what insurance policy to make because of the issuance
of bondage receipt.
Issue:
Whether Ngo Hing concealed the state of health and physical condition of
Helen Go, which rendered void the policy
Held:
Yes. Petition dismissed.
Ratio:
Relative to the second issue of alleged concealment, private respondent
had deliberately concealed the state of health and piysical condition of his daughter
Helen Go. When private respondent supplied the required essential data for the
insurance application form, he was fully aware that his one-year old daughter is
typically a mongoloid child. Such a congenital physical defect could never be
ensconced nor disguished. Nonetheless, private respondent, in apparent bad faith,
withheld the fact material to the risk to be assumed by the insurance company. As
an insurance agent of Pacific Life, he ought to know, as he surely must have known.
His duty and responsibility to such a material fact. Had he diamond said significant
fact in the insurance application from Pacific Life would have verified the same and
would have had no choice but to disapprove the application outright?
“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.”
The concealment entitles the insurer to rescind the contract of insurance.
Dispositive:
We are thus constrained to hold that no insurance contract was perfected
between the parties with the noncompliance of the conditions provided in the binding
receipt, and concealment, as legally defined, having been comraitted by herein
private respondent.
WHEREFORE, the decision appealed from is hereby set aside, and in lieu
thereof, one is hereby entered absolving petitioners Lapulapu D. Mondragon and
Great Pacific Life Assurance Company from their civil liabilities as found by
respondent Court and ordering the aforesaid insurance company to reimburse the
amount of P1,077.75, without interest, to private respondent, Ngo Hing. Costs
against private respondent.
4
SATURNINO V PHILIPPINE AMERICAN LIFE (1963)
Doctrine:
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.”
Even there is waiver; it does not make the information immaterial. It renders
the information more material.
Facts:
 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 the insured made such false representations of material
facts as to avoid the policy?
Held:
Yes, the insured made such false representations of material facts as to
avoid the policy
Ratio:
 There can be no dispute that the information given by her in the application for
insurance was false, namely, that she never had cancer or tumors or consulted
any physician or undergone any operation within the preceding period of 5
years. The question to determine is: Are the facts then falsely represented
material? The Insurance Law provides that “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 proposed contract, or making his inquiries.
 The contention of appellants is that the facts subject of the representation were
not material in view of the non-medical nature of the insurance applied for, which
does away with the usual requirement of medical examination before the policy
is issued. The contention is without merit. If anything, the waiver of medical
examination renders even more material the information required of the
applicant concerning previous condition of health and diseases suffered, for
such information necessarily constitutes an important factor which the insurer
takes into consideration in deciding whether to issue the policy or not.
Appellants also contend that there was no fraudulent concealment of the truth
inasmuch as the insured herself did not know, since her doctor never told her,
that the disease for which she had been operated on was cancer.
 In the first place, concealment of the fact of the operation itself was fraudulent,
as there could not have been any mistake about it, no matter what the ailment.
Secondly, in order to avoid a policy, it is not necessary to show actual fraud on
the part of the insured.
 In this jurisdiction, concealment, whether intentional or unintentional entitled the
insurer to rescind the contract of insurance, concealment being defined as
“negligence to communicate that which a party knows and ought to
communicate.” The basis of the rule vitiating the contract in cases of
concealment is that it misleads or deceives the insurer into accepting the risk,
or accepting it at a rate of premium agreed upon. The insurer, relying upon the
belief that the insured will disclose every material fact within his actual or
presumed knowledge, is misled into a belief that the circumstances withheld
does not exist, and he is thereby induced to estimate the risk upon a false basis
that it does not exist.
Dispositive:
The judgment appealed from, dismissing the complaint and awarding the
return to appellants of the premium already paid, with interest at 6% up to January
29, 1959, affirmed, with costs against appellants.
5
CANILANG V. CA AND GREAT PACIFIC LIFE
Doctrine:
Section 27 of the Insurance Code of 1978 is properly read as referring to
"any concealment" without regard to whether such concealment is intentional or
unintentional. The restoration of the phrase "whether intentional or unintentional"
merely underscored the fact that all throughout (from 1914 to 1985), the statute did
not require proof that concealment must be "intentional" in order to authorize
rescission by the injured party.
Facts:
 Canilang died of "congestive heart failure," "anemia," and "chronic anemia."
Petitioner, widow and beneficiary of the insured, filed a claim with Great Pacific
which the insurer denied. Petitioner then filed a complaint against Great Pacific
with the Insurance Commission for recovery of the insurance proceeds.
 During the hearing called by the Insurance Commissioner, petitioner testified
that she was not aware of any serious illness suffered by her late husband and
that, as far as she knew, her husband had died because of a kidney disorder.
A deposition was given by Dr. Wilfredo Claudio stating that he was the family
physician of Canilang and that he had previously treated him for "sinus
tachycardia" and "acute bronchitis." Insurance Commissioner ordered Great
Pacific to pay petitioner, holding that there was no intentional concealment on
the part of the insured as he had thought that he was merely suffering from a
minor ailment and simple cold.
 Had Canilang 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 or, at the
very least, required a higher premium for the same coverage.
Section 27 of the Insurance Code of 1978 provided that:
Sec. 27. A concealment entitles the injured party to rescind a
contract of insurance.
The preceding statute, Act No. 2427, as it stood from
1914 up to 1974, had provided:
Sec. 26. A concealment, whether intentional or unintentional,
entitles the injured party to rescind a contract of insurance.
Upon the other hand, in 1985, the Insurance Code of
1978 was amended by B.P. Blg. 874. This subsequent statute
modified Section 27 of the Insurance Code of 1978 so as to read
as follows:
Sec. 27. A concealment whether intentional or unintentional
entitles the injured party to rescind a contract of insurance.
Such failure precisely constituted concealment on the part of Canilang.
Petitioner's argument, if accepted, would obviously erase Section 27 from the
Insurance Code of 1978.
Dispositive:
Petition denied.

 CA 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.

ISSUE:
Whether or not Jaime Canilang "intentionally" made material concealment
in stating his state of health?

Held:
Yes, Jaime Canilang "intentionally" made material concealment in stating
his state of health

Ratio:
 The insurance Great Pacific applied for was a "non-medical" insurance policy.
Jaime Canilang failed to disclose that he had twice consulted Dr. Wilfredo B.
Claudio who had found him to be suffering from "sinus tachycardia" and "acute
bronchitis."

6
SUNLIFE ASSURANCE v. CA & BACANI
Doctrine:
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. Good faith is no defense in concealment.
The insured need not die of the disease he had failed to disclose to the
insurer. 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.
Facts:
 Robert Bacani procured a life insurance contract for himself from Sunlife
Assurance. He was issued a policy valued at P100,000, with double indemnity
in case of accidental death. The designated beneficiary was his mother
respondent Bernarda Bacani.
 Year after, the insured died in a plane crash. Bernarda filed a claim with Sunlife
seeking the benefits of the insurance policy however it was rejected on the
ground that the insured did not disclose material facts relevant to the insurance
policy, thus rendering the contract of insurance voidable. The deceased
answered in his application that he consulted with a doctor in Chinese General
Hospital but only for cough and flu complications. The other questions were
answered in the negative.
 Sunlife 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. During his confinement, the deceased
was subjected to urinalysis, ultrasonography and hematology tests.
 Bernarda and her husband filed an action for specific performance against
Sunlife.
 The TC ruled in favor of Bernarda & her husband, and concluded that the facts
concealed by the insured were made in good faith and under a belief that they
need not be disclosed. Moreover, it held that the health history of the insured
was immaterial since the insurance policy was “nonmedical.” On appeal, CA
affirmed the TC’s decision. MR having been denied, Sunlife filed the petition
with the SC.
Issue:
Whether or not the insured is guilty of concealment/misrepresentation,
which would render the insurance contract void?
Held: Yes, the insured is guilty of concealment/misrepresentation, which would
render the insurance contract void
Ratio:
o 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. Said Section
provides: “A neglect to communicate that which a party knows and ought to
communicate, is called concealment.”
o The information which the insured failed to disclose were material and relevant
to the approval and issuance of the insurance policy. The matters concealed
would have definitely affected petitioner’s action on his application, either by
approving it with the corresponding adjustment for a higher premium or rejecting
the same. Moreover, 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.
o Materiality of the information withheld does not depend on the state of mind of
the insured. Neither does it depend on the actual or physical events which
ensue. Thus, “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, raises grave doubts about his bona fides. It appears
that such concealment was deliberate on his part.
o 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 nondisclosure misled
the insurer in forming his estimates of the risks of the proposed insurance policy
or in making inquiries.
Dispositive:
Respondent lost
PHILAMCARE V CA  SEE OTHER DIGEST
7
YU PANG CHENG v CA
Doctrine:
"A neglect to communicate that which a party knows and ought to
communicate, is called concealment". Whether intentional or unintentional, the
concealment entitles the insurer to rescind the contract of insurance. The insurance
law requires the insured 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, and 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.
Facts:
 Petitioner brought this action to collect from the defendant the value of
insurance policy taken upon the life of Yu Pang Eng.
Yes, the insured is guilty of concealment of some facts material to the risk
insured against which has the effect of avoiding the policy
Ratio:
 When the insured gave his answers regarding his previous ailments, he
concealed the ailment of which he was treated in the Chinese General Hospital
which precisely has direct connection with the subject of the questions
propounded.
 The negative answers given by the insured regarding his previous ailment, or
his concealment of the fact that he was hospitalized and treated for sometime
of peptic ulcer and had suffered from "dizziness, anemia, abdominal pains and
tarry stools", deprived defendant of the opportunity to make the necessary
inquiry as to the nature of his past illness so that it may form its estimate relative
to the approval of his application.

 In its defense, the defendant said that the insured was guilty of
misrepresentation and concealment of material facts in that he gave false and
untruthful answers to certain questions asked him in his application for
insurance which were material to the risk insured against and have the effect
of avoiding the insurance policy.
 TC rendered judgment in favor of the petitioner ordering the defendant to pay
the amount of insurance policy, with interest. On appeal, CA reversed the
decision of the TC holding that the insured was guilty of concealment of
material facts which relieves defendant from liability.
 Had defendant been given such opportunity, considering the previous illness of
the insured as disclosed by the records of the Chinese General Hospital,
defendant would probably had never consented to the issuance of the policy in
question.
 In fact, according to the death certificate, the insured died of "infiltrating
medullary carcinoma, Grade, 4, advanced cardiac and of lesser curvature,
stomach metastases spleen", which may have a direct connection with his
previous illness.

 On September 5, 1950, the insured submitted his application for insurance

consisting of medical declarations. With regard to the question on previous
ailments, particularly with regard to "Gastritis, Ulcer of the Stomach or any
disease of that organ" and "Vertigo, Dizziness, Faintingspells or
Unconsciousness" the insured answered in the negative.

 However, it appears that the insured entered Chinese Gen. Hospital on

January 29, 1950 for having medical treatment up to February 11, 1950. He
complained of dizziness, anemia, abdominal pains and tarry stools. An Xray
picture of his stomach was taken and the diagnosis made of him by his doctors
showed that his illness was "peptic ulcer, bleeding."

Issue: Whether or not the insured is guilty of concealment of some facts material to
the risk insured against which has the effect of avoiding the policy?

Held:

8
COLLADO V INSULAR LIFE
Doctrine:
The acceptance of insurer 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. There was concealment on the reinstatement of
insurance policy.
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 beneficiaries instituted the present action to recover
from Insular life the death benefits of a life insurance policy valued at P2,000.
Insular refused to pay claiming concealment on the part of Vivencio.
 Collado contends that Insular life had waived the right to rescind the policy in
view of its repeated acceptance of the overdue premiums for the second and
third years.
 Municipal court of Manila ruled in favor for Collado and Insular filed an appeal
with CFI of Manila. CFI rendered judgment in favor of Insular and dismissed
Collado’s complaint. Hence this petition.
Issue:
Whether or nor Insular life was estopped from claiming that there was
concealment on the part of Vivencio as to his true health and could no longer cancel
the contract due to the fact that it accepted the tender of overdue payments from the
insured thereof.
Held:
NO. Insular life was not estopped from claiming that there was concealment
on the part of Vivencio as to his true health and could no longer cancel the contract
due to the fact that it accepted the tender of overdue payments from the insured
thereof.
Ratio:
o 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.
o 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.
o 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.
DISPOSITIVE:
Petitioner Collado lost
9
INSULAR LIFE v FELICIANO
Doctrine:
If an agent of the insurer, after obtaining from an applicant for
insurance a correct and truthful answer to interrogatories contained in the
application for insurance, without knowledge of the applicant fills in false
answers, either fraudulently or otherwise, the insurer cannot assert the falsity
of such answers as a defense to liability on the policy, and this is true
generally without regard to the subject matter of the answers or the nature of
the agent's duties or limitations on his authority, at least if not brought to the
attention of the applicant.
Facts:
 Feliciano filed an application for insurance with Insular Life upon the
solicitation of one of its agents. Two insurance policies were issued to
him. Feliciano died. Insular refused to pay on the ground that the policies
were fraudulently obtained, the insured having given false answers and
statements in the application as well as in the medical report. This action
was brought to recover on the policies.
 The lower court found that at the time Feliciano filed his application and
at the time he was subjected to physical examination by the medical
examiner, he was already suffering from tuberculosis, which appeared
negative in both application and medical report.
 It also found that Feliciano was made to sign the application and the
examiner’s report in blank, and that the black spaces were filled in by
the agent and the medical examiner, who made it appear that Feliciano
was fit subject for insurance.
 It also held that neither the insured nor any member of his family
concealed the real state of health of the insured. That as a matter of fact
the insured, as well as the members of his family, told the agent and the
medical examiner that the applicant had been sick and coughing for
sometime and that he had also gone 3 times to the Santo Sanatorium.
 Two main issues to be resolived: 1) one leading to the validation of a
policy where its agent, without fraud, collusion or bad faith on the part of
the isnured, falsified answers given by the insured 2) leading to the
avoidance of the policy under the circumstances.
Issue:
Whether or not Insular Life has the right to avoid the policy when its
agent knowingly and intentionally wrote down the answers in the application
differing from those made by the insured?
Held:
No, Insular Life has the right to avoid the policy when its agent
knowingly and intentionally wrote down the answers in the application
differing from those made by the insured.
Ratio:
o In the present case, the agent knew all the time the true state of health
of the insured. The insurer's medical examiner approved the application
knowing full well that the applicant was sick. The situation is one in which
one of two innocent parties must bear a loss for his reliance upon a third
person.
o In this case, it was the insurer who gave the agent authority to deal with
the applicant. It was the one who selected the agent, thus implying that
the insured could put his trust on him. It was the one who drafted and
accepted the policy and consummated the contract. It seems reasonable
that as between the two of them, the one who employed and gave
character to the third person as its agent should be the one to bear the
loss.
o The company received the money of the applicant as the price of the risk
to be taken by it. If the policy should be avoided, it must be because it
was void from the very beginning, and the result would be that the
insurer, while it received the money, never assumed any risk. The result
would be, in the language of one of the cases, "to place every simple or
uneducated person seeking insurance at the mercy of the insurer who
could, through its agent, insert in every application, unknown to the
applicant and over his signature, some false statements which would
enable him to avoid all liability while retaining the price paid for the
supposed insurance."
Dispositive:
Feliciano won, Insular cannot avoid the policy. It is bound by the
acts of its agent.
10
E. REPRESENTATION
Representation - is a fact can be present, past, or future to induce the insurer to
enter a contract.
Promissory or affirmative representation - future
If it an answer to query, construed in favor to the insured
Section 40, It cannot qualify but it can qualify implied a warranty. It is present in
marine insurance.
There is a right recind from the time represention becomes untrue
It cannot be waived
A representation must be presumed to refer to the date on which the contract goes
into effect.
Section 43 of Insurance Code
When a person insured has no personal knowledge of a fact, he may nevertheless
repeat information which he has upon the subject, and which he believes to be true,
with the explanation that he does so on the information of others; or he may submit
the information, in its whole extent, to the insurer; and in neither case is he
responsible for its truth, unless it proceeds from an agent of the insured, whose duty
it is to give the information.
Section 44 of Insurance Code
A representation is to be deemed false when the facts fail to correspond with its
assertions or stipulations.

Difference of Concealment and Representation Section 45 of Insurance Code

Concealment – non disclosure, past and present, makes it void. Representaion – If a representation is false in a material point, whether affirmative or promissory, the
positive assertion, past, future and present, makes it rescindable injured party is entitled to rescind the contract from the time when the representation
becomes false. The right to rescind granted by this Code to the insurer is waived by
the acceptance of premium payments despite knowledge of the ground for
Note Article 48 rescission.
Shall be enforce during the life time of the insured from the Incontestable article 47.
This is only for life insurance Section 46 of Insurance Code
The materiality of a representation is determined by the same rules as the materiality
Section 37 of Insurance Code of a concealment.
A representation may be made at the time of, or before, issuance of the policy.
Section 47 of Insurance Code
Section 38 of Insurance Code The provisions of this chapter apply as well to a modification of a contract of
The language of a representation is to be interpreted by the same rules as the insurance as to its original formation.
language of contracts in general.
Section 48 of Insurance Code
Section 39 of Insurance Code Whenever a right to rescind a contract of insurance is given to the insurer by any
A representation as to the future is to be deemed a promise, unless it appears that provision of this chapter, such right must be exercised previous to the
it was merely a statement of belief or expectation. commencement of an action on the contract.
Section 40 of Insurance Code After a policy of life insurance made payable on the death of the insured shall have
A representation cannot qualify an express provision in a contract of insurance, but been in force during the lifetime of the insured for a period of two years from the
it may qualify an implied warranty. date of its issue or of its last reinstatement, the insurer cannot prove that the policy
is void ab initio or is rescindible by reason of the fraudulent concealment or
Section 41 of Insurance Code misrepresentation of the insured or his agent.
A representation may be altered or withdrawn before the insurance is effected, but
not afterwards.

Section 42 of Insurance Code

11
EDILLON v. MANILA BANKERS LIFE INSURANCE CORPORATION
Doctrine:
It is usually held that where the insurer, at the time of the issuance of a
policy of insurance, has knowledge of existing facts which, if insisted on, would
invalidate the contract from its very inception, such knowledge constitutes a waiver
of conditions in the contract inconsistent with the known facts, and the insurer is
estopped thereafter from asserting the breach of such conditions.
Facts:
 Sometime in April 1969, Carmen O, Lapuz applied with respondent insurance
corporation for insurance coverage against accident and injuries. She filled out
the blank application form given to her and filed the same with the respondent
insurance corporation. In the said application form which was dated April 15,
1969, she gave the date of her birth as July 11, 1904.
 On the same date, she paid the sum of P20.00 representing the premium for
which she was issued the corresponding receipt signed by an authorized agent
of the respondent insurance corporation. Upon the filing of said application and
the payment of the premium on the policy applied for, the respondent insurance
corporation issued to Carmen O. Lapuz its Certificate of Insurance No.
128866.The policy was to be effective for a period of 90 days.
 On May 31, 1969 or during the effectivity of Certificate of Insurance No. 12886,
Carmen O. Lapuz died in a vehicular accident in the North Diversion Road. On
June 7, 1969, petitioner Regina L. Edillon, a sister of the insured and who was
the named beneficiary in the policy, filed her claim for the proceeds of the
insurance, submitting all the necessary papers and other requisites with the
private respondent.
 Her claim having been denied, Regina L. Edillon instituted this action in the CFI
of Rizal on August 27, 1969. In resisting the claim of the petitioner, the
respondent insurance corporation relies on a provision contained in the
Certificate of Insurance, excluding its liability to pay claims under the policy in
behalf of "persons who are under the age of sixteen (16) years of age or over
the age of sixty (60) years ..."
 It is pointed out that the insured being over sixty (60) years of age when she
applied for the insurance coverage, the policy was null and void, and no risk on
the part of the respondent insurance corporation had arisen therefrom. The trial
court sustained the contention of the private respondent and dismissed the
complaint.
Issue:
Whether or not Manila Bankers Life Insurance Corp. is absolved from
liability on the basis of the provision, in the insurance certificate, which excludes
them from liability to pay claims on behalf of persons over the age of 60 years?
Held:
No, Manila Bankers Life Insurance Corp. is not absolved from liability on
the basis of the provision, in the insurance certificate, which excludes them from
liability to pay claims on behalf of persons over the age of 60 years.
Ratio:
 The age of the insured Carmen Lapuz was not concealed to the insurance
company. Her application for insurance coverage which was on a printed form
furnished by private respondent and which contained very few items of
information clearly indicated her age of the time of filing the same to be almost
65 years of age.
 Despite such information which could hardly be overlooked in the application
form, considering its prominence thereon and its materiality to the coverage
applied for, the respondent insurance corporation received her payment of
premium and issued the corresponding certificate of insurance without question.
The accident which resulted in the death of the insured, a risk covered by the
policy, occurred on May 31, 1969 or FORTY-FIVE (45) DAYS after the
insurance coverage was applied for.
 There was sufficient time for the private respondent to process the application and to
notice that the applicant was over 60 years of age and thereby cancel the policy on that
ground if it was minded to do so. If the private respondent failed to act, it is either because
it was willing to waive such disqualification; or, through the negligence or incompetence
of its employees for which it has only itself to blame, it simply overlooked such fact. Under
the circumstances, the insurance corporation is already deemed in estoppel. Its inaction
to revoke the policy despite a departure from the exclusionary condition contained in the
said policy constituted a waiver of such condition.
 The Court cited the case of Qua Chee Gan v Law Union Insurace:
“It is usually held that where the insurer, at the time of the issuance of a policy
of insurance, has knowledge of existing facts which, if insisted on, would
invalidate the contract from its very inception, such knowledge constitutes a
waiver of conditions in the contract inconsistent with the known facts, and the
insurer is estopped thereafter from asserting the breach of such conditions.
The law is charitable enough to assume, in the absence of any showing to the
contrary, that an insurance company intends to execute a valid contract in
return for the premium received; and when the policy contains a condition
which renders it voidable at its inception, and this result is known to the insurer,
it will be presumed to have intended to waive the conditions and to execute a
binding contract, rather than to have deceived the insured into thinking he is
insured when in fact he is not, and to have taken is money without
consideration.” Dispositive: Manila Bankers Life Insurance Corp lost
12
NG GAN ZEE v. ASIAN CRUSADER LIFE ASSURANCE CORPORATION
Doctrine:
(1) Concealment exists where the assured had knowledge of a fact material
to the risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assurer, but he designedly and intentionally withholds the
same.
(2) That the concealment must, in the absence of inquiries, be not only
material, but fraudulent, or the fact must have been intentionally withheld.
Facts:
 May Kwong Nam applied for a 20-year endowment insurance on his life for the
sum of P20, 000.00, with his wife, appellee Ng Gan Zee as beneficiary. On the
same date, appellant, upon receipt of the required premium from the insured,
approved the application and issued the policy.
 On December 6, 1963, Kwong Nam died of cancer of the liver with metastasis.
All premiums had been religiously paid at the time of his death. Ng Gan Zee
presented a claim against Asian Crusader. But this was denied by the Asian
Crusader on the ground that the answers given by the insured to questions
appealing in his application were untrue.
 This was brought by Ng Gan Zee to the Insurance Commissioner to be
investigated by the latter. The investigation held that there were no material
concealment on part of the insured and therefore, the Ng Gan Zee should be
paid.
 Appellant still alleges that the insured was guilty of misrepresentation when he
answered ‘No’ to the 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.”
 Thus, Asian Crusader rationalizes that: “the insured had in January, 1962,
applied for reinstatement of his lapsed life insurance policy with the Insular Life
Insurance Co., Ltd, but this was declined by the insurance company, although
later on approved for reinstatement with a very high premium as a result of his
medical examination.” Asian Crusader further maintains that when the insured
examined in connection with his application, the insured allegedly gave false
and misleading information to his ailment and previous operation.
 The appellant directs our direction to: “[1] the report of the physician who treated
Kwong Nam at the Hospital about 2 years before he applied for an insurance
policy. According to said report, the doctor had diagnosed the patient's ailment
as 'peptic ulcer' for which, an operation, known as a 'sub-total gastric resection
was performed on the patient by Dr. Pacifico Yap; and [2] The report of the
doctor showing that the specimen removed from the patient's body was 'a
portion of the stomach measuring 12 cm. and 19 cm. along the lesser curvature
with a diameter of 15 cm. along the greatest dimension.”
 On the bases of the above undisputed medical data showing that the insured
was operated on for peptic ulcer", involving the excision of a portion of the
stomach, appellant argues that the insured's statement in his application that a
tumor, "hard and of a hen's egg size," was removed during said operation,
constituted material concealment.
 The lower court ruled in favor of Ng Gam Zee. Thus, the case was brought to
the Supreme Court being a question of law.
Issue:
Was appellant, because of insured's aforesaid representation, misled or deceived
into entering the contract or in accepting the risk at the rate of premium agreed
upon?
Held: No, the insured's aforesaid representation did not misled or deceived into
entering the contract or in accepting the risk at the rate of premium agreed upon.
Ratio:
 We agree with the lower court.
 Section 27 of the Insurance Law states, “Such party a contract of insurance
must communicate to the other, in good faith, all facts within his knowledge
which are material to the contract, and which the other has not the means of
ascertaining, and as to which he makes no warranty.”
 It is correctly observed by the lower court that misrepresentation as a defense
of the insurer to avoid liability is an affirmative defense. It should emphasized
that Kwong Nam had informed Asian Crusader that the tumor for which he was
operated on was “associated with ulcer of the stomach. His statement that said
tumor was "associated with ulcer of the stomach,” should be construed 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 the appellant.
Dispositive:
Finding no reversible error committed by the trial court, the judgment appealed from
is hereby affirmed, with costs against appellant Asian-Crusader life Assurance Corporation.
13
TAN CHAY HENG V. WEST COAST LIFE
Doctrine:
Section 17 of the Insurance Code provides that the measure of an insurable
interest in property is the extent to which the insured might be damnified by loss or
injury thereof.
FACTS:
 Plaintiff alleges that the defendant is a foreign insurance corporation duly
organized by the laws of the Philippines to engage in the insurance business.
The defendant accepted his application and approved a life insurance policy of
for the sum of P10,000 in which the plaintiff was the sole beneficiary.
 The policy was issued upon the payment by the said Tan Ceang of the first
year's premium amounting to P936; that in and by its terms, the defendant
agreed to pay the plaintiff as beneficiary the amount of the policy upon the
receipt of the proofs of the death of the insured while the policy was in force;
that without any premium being due or unpaid, Tan Ceang died on May 10,
1925. Plaintiff submitted the proofs of the death of Tan Ceang with a claim for
the payment of the policy which the defendant refused to pay.
 The defendant filed an answer to the complaint in which it made a general and
specific denial, and then announced its intention to file an amended answer,
alleging special defense.
 West Coast averred that Tan Chay Heng, in connivance with others made Tan
Ceang to enter into an insurance policy and name Tan Chay Heng as the
beneficiary; that Tan Ceang was induced to lie on the application form about his
health and life conditions (he was made to account that he was not addicted to
opium, morphine, and cocaine when in fact he was); that Tan Chay Heng was
a gang leader involved in the racket of fraudulent insurance schemes; that by
reason of these fraud and machinations, the insurance policy West Coast
issued is void; that West Coast seeks to avoid the insurance policy. Tan Chay
Heng filed a demurrer as it claimed that West Coast’s answer is a cross-
complaint and the facts contained therein was not sufficient as a defense.
 RTC ruled that Demurrer is sustained, and the defendant is given a period of
five days within which to amend its aforesaid answer. As a result of the trial the
general issues, the lower court rendered judgment for the plaintiff for P10,000,
with legal interest from January 4, 1926, and costs, to which the defendant duly
excepted and filed a motion for a new trial, which was overruled.
 On appeal the defendant assigns the following errors:
The trial court erred —
1. In sustaining plaintiff's demurrer to the special defense contained in
defendant's amended answer.
2. In holding, in effect, that an insurer cannot avoid a policy which had been
procured by fraud unless he brings an action to rescind it before he is sued
thereon.
3. In rejecting all proofs offered by the defendant during the trial for the
purpose of defeating plaintiff's fraudulent claim.
4. In not absolving the defendant from plaintiff's complaint.
Issue:
Whether or not West Coast’s action for rescission is therefore barred by
the collection suit filed by Tan Chay?
Held:
Yes, West Coast’s action for rescission is therefore barred by the collection
suit filed by Tan Chay.
Ratio:
 In the instant case, it will be noted that even in its prayer, the defendant does
not seek to have the alleged insurance contract rescinded. It denies that it ever
made any contract of insurance on the life of Tan Ceang or that any such a
contract ever existed, and that is the question which it seeks to have litigated
by its special defense.
 In the very nature of things, if the defendant never made or entered into the
contract in question, there is no contract to rescind, and, hence, section 47 upon
which the lower based its decision in sustaining the demurrer does not apply.
As stated, an action to rescind a contract is founded upon and presupposes the
existence of the contract which is sought to be rescinded. If all of the material
matters set forth and alleged in the defendant's special plea are true, there was
no valid contract of insurance, for the simple reason that the minds of the parties
never met and never agreed upon the terms and conditions of the contract.
 If such matters are known to exist by a preponderance of the evidence, they
would constitute a valid defense to plaintiff's cause of action. Upon the question
as to whether or not they or are not true, we do not at this time have or express
any opinion, but we are clear that section 47 does not apply to the allegations
made in the answer, and that the trial court erred in sustaining the demurrer.
Dispositive:
The judgment of the lower court is reversed and the case is remanded for
such other and further proceedings as are not inconsistent with this opinion, with
costs against the plaintiff.
14
TAN VS. CA, 1989
Doctrine:
The so-called "incontestability clause" precludes the insurer from raising
the defenses of false representations or concealment of material facts insofar as
health and previous diseases are concerned if the insurance has been in force for
at least two years during the insured's lifetime.
The phrase "during the lifetime" found in Section 48 simply means that the
policy is no longer considered in force after the insured has died. The key phrase in
the second paragraph of Section 48 is "for a period of two years."
Facts:
 On September 23,1973, Tan Lee Siong, father of herein petitioners, applied for
life insurance in the amount of P 80,000.00 with respondent Philippine American
Life Insurance Company. Said application was approved, with petitioners the
beneficiaries thereof. Tan Lee Siong died of hepatoma on April 26,1975.
 Petitioners then filed with respondent company their claim for the proceeds of
the life insurance policy. Respondent company denied petitioners' claim and
rescinded the policy by reason of the alleged misrepresentation and
concealment of material facts made by the deceased Tan Lee Siong in his
application for insurance. The premiums paid on the policy were thereupon
refunded.
 Alleging that respondent company's refusal to pay them the proceeds of the
policy was unjustified and unreasonable, petitioners filed a complaint against
the former with the Office of the Insurance Commissioner.
 Insurance Commissioner dismissed petitioners' complaint.
 CA dismissed petitioners' appeal from the Insurance Commissioner's
decision for lack of merit. Petitioners contend that the respondent company
no longer had the right to rescind the contract of insurance as rescission
must allegedly be done during the lifetime of the insured within two years
and prior to the commencement of action. According to the petitioners, the
Insurance Law was amended and the second paragraph of Section 48
added to prevent the insurance company from exercising a right to rescind
after the death of the insured.
Issues:
Whether or not respondent insurer may be allowed to avoid the policy on
grounds of concealment by the deceased assured. YES
The pertinent section in the Insurance Code provides:
Section 48. Whenever a right to rescind a contract of insurance is given to
the insurer by any provision of this chapter, such right must be exercised
previous to the commencement of an action on the contract.
After a policy of life insurance made payable on the death of the insured
shall have been in force during the lifetime of the insured for a period of two
years from the date of its issue or of its last reinstatement, the insurer
cannot prove that the policy is void ab initio or is rescindable by reason of
the fraudulent concealment or misrepresentation of the insured or his
agent.
Held:
 The so-called "incontestability clause" precludes the insurer from raising the
defenses of false representations or concealment of material facts insofar as
health and previous diseases are concerned if the insurance has been in force
for at least two years during the insured's lifetime. The phrase "during the
lifetime" found in Section 48 simply means that the policy is no longer
considered in force after the insured has died. The key phrase in the second
paragraph of Section 48 is "for a period of two years."
 As noted by the Court of Appeals, to wit:
The policy was issued on November 6, 1973 and the insured died on April
26,1975. The policy was thus in force for a period of only one year and five
months. Considering that the insured died before the two-year period had
lapsed, respondent company is not, therefore, barred from proving that the
policy is void ab initio by reason of the insured's fraudulent concealment or
misrepresentation. Moreover, respondent company rescinded the contract
of insurance and refunded the premiums paid on September 11, 1975,
previous to the commencement of this action on November 27, 1975.
 Petitioners contend that there could have been no concealment or
misrepresentation by their late father because Tan Lee Siong did not have to
buy insurance. He was only pressured by insistent salesmen by solicitations
and visits.
 Assured was a man of means. He could have obtained a bigger insurance, not
just P80,000.00. If his purpose were to misrepresent and to conceal his
ailments in anticipation of death during the two-year period, he certainly could
have gotten a bigger insurance. He did not.
 It is of common knowledge that the selling of insurance today is
subjected to the whirlwind pressure of modern salesmanship.
Insurance companies send detailed instructions to their agents to
solicit and procure applications.
15
 the deceased was complaining of progressive weight loss and
 These agents are to be found all over the length and breadth of the abdominal pain and was diagnosed to be suffering from
land. They are stimulated to more active efforts by contests and by the hepatoma. Another physician, Dr. Wenceslao Vitug, testified that
keen competition offered by the other rival insurance companies. They the deceased came to see him on December 14, 1973 for
supply all the information, prepare and answer the applications, submit consolation and claimed to have been diabetic for five years.
the applications to their companies, conclude the transactions, and Because of the concealment made by the deceased of his
otherwise smooth out all difficulties. The agents in short do what the consultations and treatments for hypertension, diabetes and liver
company set them out to do. In the face of all the above, it would be disorders, respondent company was thus misled into accepting
unjust if, having been subjected to the whirlwind pressure of insurance the risk and approving his application as medically standard and
salesmanship this Court itself has long denounced, the assured who dispensing with further medical investigation and examination.
dies within the two-year period, should stand charged of fraudulent For as long as no adverse medical history is revealed in the
concealment and misrepresentation." (Insular Life v. Feliciano) application form, an applicant for insurance is presumed to be
healthy and physically fit and no further medical investigation or
 The legislative answer to the arguments posed by the petitioners is the examination is conducted by respondent company.
"incontestability clause" added by the second paragraph of Section 48.
Dispositive: Petition is denied.
 The insurer has two years from the date of issuance of the insurance contract
or of its last reinstatement within which to contest the policy, whether or not, the
insured still lives within such period. After two years, the defenses of
concealment or misrepresentation, no matter how patent or well founded, no
longer lie. Congress felt this was a sufficient answer to the various tactics
employed by insurance companies to avoid liability. The petitioners'
interpretation would give rise to the incongruous situation where the
beneficiaries of an insured who dies right after taking out and paying for a life
insurance policy, would be allowed to collect on the policy even if the insured
fraudulently concealed material facts.

 As to evidence of concealment or misrepresentation

o The petitioners argue that no evidence was presented to show that the
medical terms were explained in a layman's language to the insured.
The same is not well taken

We agree with the Court of Appeals which ruled:

The deceased, by affixing his signature on the application form,
affirmed the correctness of all the entries and answers appearing
therein. It is but to be expected that he, a businessman, would not
have affixed his signature on the application form unless he
clearly understood its significance. For, the presumption is that a
person intends the ordinary consequence of his voluntary act and
takes ordinary care of his concerns.

The evidence for respondent company shows that on September

19,1972, the deceased was examined by Dr. Victoriano Lim and
was found to be diabetic and hypertensive; that by January, 1973,

16
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