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G.R. No.


September 13, 1941

THE INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. SERAFIN D. FELICIANO and ANGEL, FLORENDA, EUGENIO, HERMINIO and LETICIA, all surnamed FELICIANO, represented by their guardian ad litem SERAFIN D. FELICIANO, respondents. LAUREL, J.: FACTS: One Evaristo Feliciano filed an application for insurance with the herein petitioner upon the solicitation of one of its agents. Two insurance policies to the aggregate amount of P25,000 were issued to him. Feliciano died on September 29, 1935. The defendant company (petitioner) 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. The present action was brought to recover on said policies. Lower court in favor of plaintiff (respondent)finding that: y Feliciano was made to sign the application and the examiner's report in blank, and that afterwards the blank spaces therein were filled in by the agent (Romulo M. David ) and the medical examiner (Dr. Gregorio Valdez), who made it appear therein that Feliciano was a fit subject for insurance. y 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 three times to the Santol Sanatarium. CA affirmed. Hence, this petition.

ISSUE: WON the policy remains to be valid in spite of the fact that the agent, without fraud, collusion or bad faith on the part of the insured, falsified the answers given by the insured. HELD: YES Insurance companies send detailed instructions to their agents to solicit and procure applications. These agents are to be found all over the length and breadth of the land. The agents, in short, do what the company set them to do. In the present case, the agent knew all the time the true state of health of the insured. The insurer's medical examiner approve 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. 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 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. If the policy should be avoided, it must be because it was void from the very beginning. The insurer cannot assert the falsity of such answers as a defense to liability on the policy. The fact that the insured did not read the application which he signed, is not indicative of bad faith. It has been held that it is not negligence for the insured to sign an application without first reading it if the insurer by its conduct in appointing the agent influenced the insured to place trust and confidence in the agent. In the instant case, it has been proved that the insured could not read English, the language in which the application was written, and that after the contract was signed, it was kept by his mother. As a consequence, the insured had no opportunity to read or correct any misstatement therein. Petition dismissed.

Concealment Case Digest

G.R. No. L-47593 December 29, 1943 THE INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. SERAFIN D. FELICIANO ET AL., respondents. OZAETA, J.: MOTION FOR RECONSIDERATION FACTS: A motion to reconsider and set aside said decision has been filed by the petitioner, and both parties have submitted exhaustive and luminous written arguments in support of their respective contentions. Agent s reason for falsifying the application: for the purpose of securing the Company's approval of the application so that the policy to be issued thereon might be credited to said agent in connection with the inter-provincial contest which the Company was then holding among its soliciting agents to boost the sales of its policies. Moreover, Agent David bribed Medical Examiner Valdez with money which the former borrowed from the applicant's mother by way of advanced payment on the premium, according to the finding of the Court of Appeals. petitioner insists: that upon the facts of the case the policies in question are null and void ab initio and that all that the respondents are entitled to is the refund of the premiums paid thereon.

ISSUE: WON Policy still valid. HELD: We cannot bring ourselves to believe that the insured did not take the trouble to read the answers contained in the photostatic copy of the application attached to and made a part of the policy before he accepted it and paid the premium thereon. He must have notice that the answers to the questions therein asked concerning his clinical history were false, and yet he accepted the first policy and applied for another. By accepting the policy he became charged with knowledge of its contents, whether he actually read it or not. The insured, therefore, had no right to rely and we cannot believe he relied in good faith upon the oral representation of said agent and medical examiner that he (the applicant) was a fit subject for insurance notwithstanding that he had been and was still suffering with advanced pulmonary tuberculosis. From all the facts and circumstances of this case, we are constrained to conclude that the insured was a coparticipant, and coresponsible with Agent David and Medical Examiner Valdez, in the fraudulent procurement of the policies in question and that by reason thereof said policies are void ab initio. MR sustained. CA reversed in favor of Petitioner Company.

Concealment Case Digest

G.R. No. 105135 June 22, 1995 SUNLIFE ASSURANCE COMPANY OF CANADA, petitioner, vs. The Hon. COURT OF APPEALS and Spouses ROLANDO and BERNARDA BACANI, respondents. QUIASON, J.: FACTS: On April 15, 1986, Robert John B. Bacani procured a life insurance contract for himself from petitioner. He was issued Policy No. 3-903766-X valued at P100,000.00, with double indemnity in case of accidental death. The designated beneficiary was his mother, respondent Bernarda Bacani. The insured died in a plane crash. Respondent Bernarda Bacani filed a claim with petitioner, seeking the benefits of the insurance policy taken by her son. Petitioner after investigation denied the claim. Petitioner informed respondent Bernarda Bacani in a letter, that the insured did not disclose 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. Petitioner contends: Claiming concealment and misrepresentation 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, ultra-sonography and hematology tests. respondent Bernarda Bacani and her husband, respondent Rolando Bacani, filed an action for specific performance against petitioner with the RTC. Petitioner then moved for a summary judgment and the trial court decided in favor of private respondents. Trial court 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 "non-medical". CA affirmed. MR denied. Hence this petition.

ISSUE: WON there was concealment. HELD: YES. Judgment is based on a misappreciation of the facts. 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. 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 issuance of the insurance policy. The matters concealed would have definitely affected petitioner's action on his application. 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, "goad 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. 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. 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. Petition granted.

Concealment Case Digest

G.R. No. 92492 June 17, 1993 THELMA VDA. DE CANILANG, petitioner, vs. HON. COURT OF APPEALS and GREAT PACIFIC LIFE ASSURANCE CORPORATION, respondents. FELICIANO, J.: FACTS: June 18, 1982: Jaime Canilang consulted Dr. Wilfredo B. Claudio and was diagnosed as suffering from "sinus tachycardia." August 3, 1982: was found to have "acute bronchitis." August 4, 1982: Jaime Canilang applied for a "non-medical" insurance policy with respondent Great Pacific Life Assurance Company ("Great Pacific") naming his wife, Thelma Canilang, as his beneficiary. Jaime Canilang was issued ordinary life insurance Policy No. 345163, with the face value of P19,700, effective as of August 9, 1982. August 5, 1983: Canilang died of "congestive heart failure," "anemia," and "chronic anemia." December 5, 1983: Respondent Great Pacific denied the claim of the widow-beneficiary. Widow filed a complaint for recovery of insurance proceeds .

Insurance Commissioner Armando Ansaldo ordered Great Pacific to pay P19,700 plus legal interest and P2,000.00 as attorney's fees after holding that: 1. the ailment of Jaime Canilang was not so serious that, even if it had been disclosed, it would not have affected Great Pacific's decision to insure him; 2. Great Pacific 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; 3. there was no intentional concealment on the part of the insured Jaime Canilang as he had thought that he was merely suffering from a minor ailment and simple cold; and 4. Batas Pambansa Blg. 847 which voids an insurance contract, whether or not concealment was intentionally made, was not applicable to Canilang's case as that law became effective only on 1 June 1985. On appeal CA reversed, dismissing the here in petitioner s complaint. Court of Appeals 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.

ISSUE: WON deceased insured, Jaime Canilang, made a material concealment as the state of his health at the time of the filing of insurance application, justifying respondent's denial of the claim. HELD: YES. The medical declaration which was set out in the application for insurance executed by Jaime Canilang read as follows: MEDICAL DECLARATION I hereby declare that: (1) I have not been confined in any hospital, sanitarium or infirmary, nor receive any medical or surgical advice/attention within the last five (5) years. (2) I have never been treated nor consulted a physician for a heart condition, high blood pressure, cancer, diabetes, lung, kidney, stomach disorder, or any other physical impairment. (3) I am, to the best of my knowledge, in good health.

Concealment Case Digest

EXCEPTIONS: ________________________________________________________________________________ XXXXXX Illegible Signature of Applicant.

Concealment: We note that in addition to the negative statements made by Mr. Canilang in paragraph 1 and 2 of the medical declaration, he failed to disclose in the appropriate space, under the caption "Exceptions," that he had twice consulted Dr. Wilfredo B. Claudio who had found him to be suffering from "sinus tachycardia" and "acute bronchitis." Under the foregoing provisions (Sec. 26 & Sec. 28), 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." Materiality: The test of materiality is contained in Section 31 of the Insurance Code of 1978. 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 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. Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance. The net result therefore of the phrase "whether intentional or unitentional" is precisely to leave unqualified the term "concealment." Thus, 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 statute did not require proof that concealment must be "intentional" in order to authorize rescission by the injured party. Waiver: We find it difficult to take seriously the argument that Great Pacific 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. Petition denied.

Concealment Case Digest