Argente v. West Coast Life Insurance Co.

- Misrepresentation
51 PHIL 725

Facts:

> A joint life insurance policy was issued to Bernardo Argente and his wife Vicenta upon payment of premium, by West Coast.

> On Nov. 18, 1925, during the effectivity of the policy, Vicenta died of cerebral apoplexy. Thereafter, Bernardo claimed
payment but was refused.

> It is admitted that in the Medical Examiner’s report, Vicenta, in response to the question asked by the medical examiner, her
replies were as follows:

o “How frequently do you use beer, wine, spirits and other intoxicants?” she answered “beer only in small quantities”.

o “What physician have you consulted or been treated by within the last 5 years and for what illness or ailment?” she
answered “none”

> It is however, not disputed that in 1924, Vicenta was taken to a hospital for what was first diagnosed as alcoholism and later
changed to manic-depressive psychosis and then again changed to pscyhonuerosis.

Issue: Whether or not on the basis of the misrepresentations of Vicenta, Bernardo is barred from recovery.

Held: Yes. The court found that the representations made by Vicenta in his application for life insurance were false with respect
to her state of health and that she knew and was aware that the representations so made by her were false. 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 answer becomes the determining factor.

If the policy was procured by fraudulent misrepresentations, the contract of insurance apparently set forth therein was never
legally existent. It can be fairly assumed that had the true facts been disclosed by the insured, the insurance would never have
been granted.

Great Pacific v CA G.R. No. L-31845 April 30, 1979

J. De Castro

Facts:
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. He supplied the essential data which petitioner Mondragon, the Branch Manager, wrote on
the form. 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. 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.
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.
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.

Issues:
1. Whether the binding deposit receipt constituted a temporary contract of the life insurance in question
2. Whether Ngo Hing concealed the state of health and physical condition of Helen Go, which rendered void the policy

Held: No. Yes. Petition dismissed.

Ratio:
The receipt was intended to be merely a provisional insurance contract. Its perfection was subject to compliance of the
following conditions: (1) that the company shall be satisfied that the applicant was insurable on standard rates; (2) that if the
company does not accept the application and offers to issue a policy for a different plan, the insurance contract shall not be
binding until the applicant accepts the policy offered; otherwise, the deposit shall be refunded; and (3) that if the company
disapproves the application, the insurance applied for shall not be in force at any time, and the premium paid shall be returned
to the applicant.
The receipt is merely an acknowledgment that the latter's branch office had received from the applicant the insurance premium
and had accepted the application subject for processing by the insurance company. There was still approval or rejection the
same on the basis of whether or not the applicant is "insurable on standard rates." Since Pacific Life disapproved the insurance
application of respondent Ngo Hing, the binding deposit receipt in question had never become in force at any time. The binding
deposit receipt is conditional and does not insure outright. This was held in Lim v Sun.
The deposit paid by private respondent shall have to be refunded by Pacific Life.
2. Ngo Hing had deliberately concealed the state of health of his daughter Helen Go. When he supplied data, he was fully
aware that his one-year old daughter is typically a mongoloid child. He withheld the fact material to the risk insured.
“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.
Saturnino v. Philamlife - False Representation
7 SCRA 316

Facts:

> 2 months prior to the insurance of the policy, Saturnino was operated on for cancer, involving complete removal of the right
breast, including the pectoral muscles and the glands, found in the right armpit.

> Notwithstanding the fact of her operation, Saturnino did not make a disclosure thereof in her application for insurance.

> She stated therein that she did not have, nor had she ever had, among others listed in the application, cancer or other
tumors; that she had not consulted any physician, undergone any operation or suffered any injury within the preceding 5 years.

> She also stated that she had never been treated for, nor did she ever have any illness or disease peculiar to her sex,
particularly of the breast, ovaries, uterus and menstrual disorders.

> The application also recited that the declarations of Saturnino constituted a further basis for the issuance of the policy.

Issue: Whether or not the insured made such false representation of material facts as to avoid the policy.

Held: YES. 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.
Vda. De Canilang v. CA - Concealment
223 SCRA 443 (1993)

Facts:

> Canilang consulted Dr. Claudio and was diagnosed as suffering from "sinus tachycardia." Mr. Canilang consulted the same
doctor again on 3 August 1982 and this time was found to have "acute bronchitis."

> On the next day, 4 August 1982, Canilang applied for a "non-medical" insurance policy with Grepalife naming his wife, as his
beneficiary. Canilang was issued ordinary life insurance with the face value of P19,700.

> On 5 August 1983, Canilang died of "congestive heart failure," "anemia," and "chronic anemia." The wife as beneficiary, filed
a claim with Grepalife which the insurer denied on the ground that the insured had concealed material information from it.

> Vda Canilang filed a complaint with the Insurance Commissioner against Grepalife contending that as far as she knows her
husband was not suffering from any disorder and that he died of kidney disorder.

> Grepalife was ordered to pay the widow by the Insurance Commissioner holding that there was no intentional concealment
on the Part of Canilang and that Grepalife had waived its right to inquire into the health condition of the applicant by the
issuance of the policy despite the lack of answers to "some of the pertinent questions" in the insurance application. CA
reversed.

Issue: Whether or not Grepalife is liable.

Held: SC took note of the fact that Canilang failed to disclose that hat he had twice consulted Dr. Wilfredo B. Claudio who had
found him to be suffering from "sinus tachycardia" and "acute bronchitis. Under the relevant provisions of the Insurance Code,
the information concealed must be information which the concealing party knew and "ought to [have] communicate[d]," that is
to say, information which was "material to the contract.
The information which Canilang failed to disclose was material to the ability of Grepalife to estimate the probable risk he
presented as a subject of life insurance. Had Canilang disclosed his visits to his doctor, the diagnosis made and the medicines
prescribed by such doctor, in the insurance application, it may be reasonably assumed that Grepalife 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.
The materiality of the information withheld by Canilang from Grepalife did not depend upon the state of mind of Jaime
Canilang. A man's state of mind or subjective belief is not capable of proof in our judicial process, except through proof of
external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn. Neither does
materiality depend upon the actual or physical events which ensue. 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.
SC found it difficult to take seriously the argument that Grepalife had waived inquiry into the concealment by issuing the
insurance policy notwithstanding Canilang's failure to set out answers to some of the questions in the insurance application.
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.
Sun Life v. CA - Concealment in Insurance
245 SCRA 268 (1995)

Facts:
> On April 15, 1986, Bacani procured a life insurance contract for himself from Sun Life. He was issued a life insurance policy
with double indemnity in case of accidental death. The designated beneficiary was his mother, Bernarda.

> On June 26, 1987, the insured died in a plane crash. Bernarda Bacani filed a claim with Sun Life, seeking the benefits of the
insurance. Sun Life conducted an investigation and its findings prompted it to reject the claim.
> Sun Life discovered that 2 weeks prior to his application, Bacani 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, ultra-
sonography and hematology tests. He did not reveal such fact in his application.

> In its letter, Sun Life informed Berarda, that the insured did not disclosed material facts relevant to the issuance of the policy,
thus rendering the contract of insurance voidable. A check representing the total premiums paid in the amount of P10,172.00
was attached to said letter.

> Bernarda and her husband, filed an action for specific performance against Sun Life. RTC ruled for Bernarda holding that the
facts concealed by the insured 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." CA affirmed.

Issue: Whether or not the beneficiary can claim despite the concealment.

Held: NOPE.
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.

Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the
party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his
inquiries (The Insurance Code, Sec 31)

The terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to his health.
The information which the insured failed to disclose were material and relevant to the approval and the 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.

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 bonafides. It appears that such concealment
was deliberate on his part.
Edillon v. Manila Bankers Life Insurance Corp. - Concealment
117 SCRA 187

Facts:
> In Apr. 1969, Carmen Lapuz applied for insurance with Manila Bankers. In the application she stated the date of her birth as
July 11, 1904 (around 64 yrs old). The policy was thereafter issued.

> Subsequently, in May 1969, Carmen died of a car accident. Her sister, as beneficiary claimed the proceeds of the insurance.

> Manila Bankers refused to pay because the certificate of insurance contained a provision excluding it’s liability to pay claims
to persons under 16 or over 60.

Issue: Whether or not the policy is void considering that the insured was over 60 when she applied.

Held: NO. The age of Carmen was not concealed to the insurance company. Her application form indicated her true age.
Despite such information, Manila Bankers accepted the premium and issued the policy. It had all the time to process the
application and notice the applicant’s age. If it failed to act, it was because Manila Bankers was willing to waive such
disqualifications or it simply overlooked such fact. It is therefore estopped from disclaiming any liability.