Ng Gan Zee vs.

Asian Crusader Life Assurance

G.R. No. L-30685
May 30, 1983

Facts

Kwong Nam applied for a 20-year endowment insurance on his life with his wife,
petitioner Ng Gan Zee as beneficiary. Respondent, upon receipt of the required
premium from the insured, approved the application and issued the corresponding
policy. Kwong Nam died of cancer of the liver with metastasis. Petitioner presented
a claim for payment of the face value of the policy. Respondent denied the claim on
the ground of misrepresentation.

Petitioner brought the matter to the Insurance Commissioner which found no

material concealment on the part of the insured and that, therefore, petitioner should
be paid the full face value of the policy. Respondent still refused to settle its
obligation and insisted that the insured was guilty of misrepresentation in answering
"No" when he was asked if any life insurance company refused his application for
insurance or for reinstatement of a lapsed. In its brief, respondent pointed out that
the insured applied for reinstatement with Insular Life which initially rejected the
same.

The CFI rejected respondent’s argument and held that no new policy was issued to
Kwong Nam in connection with the said application for reinstatement and
amendment.

Issue & Ruling

Whether or not the insured was guilty of misrepresentation when he applied for
the insurance

No. Assuming that the aforesaid answer given by the insured is false, as claimed by
the appellant. Sec. 27 of the Insurance Code nevertheless requires that fraudulent
intent on the part of the insured be established to entitle the insurer to rescind the
contract. This was not sufficiently established by respondent.

In this case, Kwong Nam informed the medical examiner that the tumor for which
he was operated on was associated with ulcer of the stomach. In the absence of
evidence that the insured had sufficient medical knowledge as to enable him to
distinguish between peptic ulcer and a tumor, his statement 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.

Also, if the ailment and operation of Kwong Nam had such an important bearing on
the question of whether the respondent would undertake the insurance or not, the
court cannot understand why the respondent did not make any further inquiries on
such matters from the hospital. The fact of the matter is that the respondent was too
eager to accept the application and receive the insured's premium. It would be
inequitable now to allow the defendant to avoid liability under the circumstances.
Vda. De Canilag v. CA
G.R. No. 92492
June 17, 1993

Facts

Jaime Canilang was initially diagnosed with sinus tachycardia but was later changed
to acute bronchitis. Canilang applied for a non-medical insurance policy with
respondent Great Pacific naming petitioner, his wife, as his beneficiary. Canilang
was issued an ordinary life insurance policy. 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 on the ground that
the insured had concealed material information from it.

Petitioner then filed a complaint with the Insurance Commission and was granted
after holding that the ailment of Jaime Canilang was not so serious as to affect Great
Pacific's decision to insure him; Great Pacific had waived its right to inquire into the
health condition of the applicant; there was no intentional concealment on the part
of the insured as he had thought that he was merely suffering from a minor ailment.

The CA reversed the decision of the Insurance Commission holding 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 & Ruling

Whether or not the insured’s previous medical consultation and treatment is

material which should have been disclosed with the insurer

Yes. The information which Jaime Canilang failed to disclose was material to the
ability of Great Pacific to estimate the probable risk he presented as a subject of life
insurance. Had 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.

In any case, in the case at bar, the nature of the facts not conveyed to the insurer was
such that the failure to communicate must have been intentional rather than merely
inadvertent. For Jaime Canilang could not have been unaware that his heart beat
would at times rise to high and alarming levels and that he had consulted a doctor
twice in the two (2) months before applying for non-medical insurance. Indeed, the
last medical consultation took place just the day before the insurance application was
filed. In all probability, Jaime Canilang went to visit his doctor precisely because of
the discomfort and concern brought about by his experiencing "sinus tachycardia."
Yu Pang Cheng vs. CA
G.R. No. L-12465
May 29, 1959

Facts

Yu Pang Eng submitted parts II and III of his application for insurance consisting if
the medical declaration made by him to the medical examiner of defendant and the
medical examiner’s report. Afterwards, he submitted part I of his application which
is the declaration made by him to an agent of defendant. Upon payment of the first
premium, defendant issued to the insured the policy.

The insured entered St. Luke’s Hospital for medical treatment but died two months
later. According to the death certificate, he died of "infitrating medullary carcinoma,
Grade 4, advanced catdiac and of lesser curvature, stomach metastases spleen."
Petitioner, brother and beneficiary of the insured, demanded from respondent the
payment of the proceeds of the insurance policy and when the demand was refused
on the ground of misrepresentation and concealment of material facts.

Issue & Ruling

Whether or not the insured is guilty of concealment of material facts which should
have been disclosed to the insurer

Yes. Our Insurance Code provides that a neglect to communicate that which a party
knows and ought to communicate, is called concealment which entitles the insurer
to rescind the contract of insurance. The Insurance Code even 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.

In this case, the insured gave his answers regarding his previous ailment, particularly
with regard to "Gaztritis, Ulcer of the Stomach or any disease of that organ" and
"Vertigo, Dizziness, Fainting-spells or Unconsciousness", he concealed the ailment
of which he was treated in the Chinese General Hospital. The negative answers given
by the insured regarding his previous ailment, or his concealment of the fact that he
was hospitalized and treated for some time 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.

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.
Great Pacific Life Assurance vs. CA
G.R. No. L-31845
April 30, 1979

Facts

Private respondent Ngo Hing filed an application with the Great Pacific for a 20-
year endownment policy on the life of his one-year old daughter. Said respondent
supplied the essential data which petitioner Mondragon, Branch Manager of the
Pacific Life in Cebu City wrote on the corresponding form and eventually type-wrote
it which was signed by private respondent Ngo Hing. Upon the payment of the
insurance premuim, the binding deposit receipt was issued to private respondent 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.

Mondragon received a letter from Pacific Life disapproving the insurance

application, stating that said life insurance application for 20-year endowment plan
is not available for minors below seven years old. The non-acceptance of the
insurance plan was allegedly not communicated by petitioner Mondragon to private
respondent Ngo Hing. Instead, Mondragon wrote back Pacific Life again strongly
recommending the approval of the 20-year endowment insurance plan to children,
pointing out that since 1954 the customers, especially the Chinese, were asking for
such coverage.

Helen Go died of influenza with complication of bronchopneumonia. Private

respondent sought the payment of the proceeds of the insurance, but having failed in
his effort, he filed the action for the recovery of the same before the CFI of Cebu,
which rendered the adverse decision against both petitioners.

Issue & Ruling

Whether or not private respondent concealed the state of health of the insured
from the insurer

Yes. 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. Whether intentional or
unintentional the concealment entitles the insurer to rescind the contract of
insurance. Private respondent appears guilty thereof.

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
disguised. 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 form Pacific Life would have verified the same and would
have had no choice but to disapprove the application outright.