83. Yu Pang v.

CA 105 Phil 930 (1959) (Casabuena)

Petitioner:  YU PANG CHENG alias YU PANG CHING Date:

Respondent:  THE COURT OF APPEALS, ET AL. Topic: Section 27
FULL TEXT
Facts: 

1. On September 1950, Yu Pang Eng submitted his application for insurance to an insurance
company.

2. He answered “no” to questions on his medical history (stomach diseases, dizziness, ulcers,
vertigo, cancer, tumors, etc.) as well as to the question of WON he consulted any physician
regarding said diseases.

3. Upon payment of the first premium, the company issued to him an insurance policy. In December
1950, he went to St. Luke’s for medical treatment, but he died two months later.

4. According to the death certificate, he died of infiltrating medullary carcinoma, Grade 4, advanced
cardiac and of lesser curvature, stomach metastases spleen.

6. His brother and beneficiary, Yu Pang Cheng [petitioner], demanded from the insurance company
the payment of the policy proceeds [10k], but his demand was refused so he brought the present
action.

7. The insurance company’s defense was that the insured was guilty of misrepresentation and
concealment of material facts in that he gave false and untruthful answers to questions asked him in
his application; hence, the effect is the avoiding of the policy.

8. It appears that the insured entered the Chinese General Hospital for medical treatment in January
1950 [before application for insurance policy], complaining of dizziness, anemia, abdominal pains
and tarry stools. His illness history shows that this started a year ago as frequent dizziness. An x-ray
picture of his stomach and the diagnosis was that he suffered from peptic ulcer, bleeding.

ISSUE:
Whether or not the insured is guilty of concealment of some facts material to the risk insured that
consequently avoids the policy [YES]

RATIONALE: 

INSURED IS GUILTY OF CONCEALMENT OF MATERIAL FACTS

Concealment is a neglect to communicate that which a party knows and ought to communicate.
Whether intentional or not, concealment entitles the insurer to rescind the contract. The 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. The materiality is determined
not by the event but by the probable and reasonable influence of the facts upon the party to whom
the communication is due.

The insured’s negative answers to the questions on his previous ailments, or his concealment of his
hospitalization deprived the insurance company 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. Had the insurance company been given such opportunity, it would not probably consent
 to the policy issuance.

DISPOSITIVE PORTION: 

Wherefore, the decision appealed from is affirmed, with costs against Petitioner-Appellant.

Additional Notes:
"Section 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of
insurance.

1. INSURANCE; WORDS AND PHRASES; "CONCEALMENT." — "A neglect to communicate that which a
party knows and ought to communicate is called concealment." (Section 25, Act NO. 2427.)

2. ID.; CONCEALMENT AS GROUND FOR RESCESSION OF CONTRACT. — Whenever intentional the

concealment entitles the insurer to rescind the contract of insurance. (Section 26 of Act No. 2427.)

3. ID.; DUTY OF INSURED TO COMMUNICATE ALL FACTS TO INSURER. — The insurance law requires
the insured to communicate to the insurere all facts within his knowledge which are material to the
contract and which the other party has not the means of ascertaining (Section 27), 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 (Section 30 of Act 2427.)