Sunlife Assurance v. CA

SUNLIFE ASSURANCE v. CA and SPS. ROLANDO and BERNARDA BACANI

1995 / Quiason / Petition for review on certiorari of a CA decision

FACTS

On April 1986, Robert John Bacani procured for himself a life insurance contract from Sunlife. He was issued a policy valued at 100k with double indemnity in case of accidental death, and his beneficiary was his mother, Bernarda. On June 1987, Robert died in a plane crash.

Bernarda filed a claim with Sunlife, seeking the benefits of her son’s insurance policy. The findings of the investigation conducted by Sunlife prompted it to reject the claim. Sunlife informed Bernarda that Robert did not disclose material facts relevant to the policy issuance, thus rendering the contract voidable. Sunlife claimed that Robert gave false statements in his application when he answered questions regarding consulting doctors [re: urine, kidney, bladder disorder], submitting to medical exams, and being admitted to a hospital within the past 5 years. Robert only said that he consulted a doctor for cough and flu complications. Sunlife discovered that 2 weeks prior to Robert’s application for insurance, he was examined and confined at the Lung Center where he was diagnosed for renal failure. A check representing the premiums paid was attached to the letter.

Sps. Bacani filed an action for specific performance against Sunlife. RTC ruled in favor of Sps. Bacani, saying that the facts concealed by Robert were made in good faith and under a belief that they need not be disclosed. It also held that Robert’s health history was immaterial since the insurance policy was “non-medical.” CA affirmed RTC.

SUNLIFE PROPERLY EXERCISED ITS RIGHT TO RESCIND THE CONTRACT BY REASON OF ROBERT’S CONCEALMENT

RATIO

“Good faith” is no defense in concealment. Materiality is to be determined 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. Materiality does not depend on the insured’s state of mind, nor does it depend on the actual or physical events that ensue.

            The matters concealed would have affected Sunlife’s action on Robert’s application, as it would have approved it with the corresponding adjustment for a higher premium or it would have rejected it. A disclosure may have warranted a medical examination by Sunlife in order for it to assess the risk involved in accepting the application. In addition, Robert’s failure to disclose his hospitalization raises grave doubts about his good faith.

The argument that Sunlife’s waiver of the medical examination debunks the materiality of the facts concealed is untenable. The waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant, for such information constitutes an important factor which the insurer takes into consideration in deciding WON to issue the policy. Moreover, this argument by Sps. Bacani would make ineffective the provision that allows rescission where there is concealment.

The insured need not die of the disease he had failed to disclose. 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.

CA DECISION REVERSED; SUNLIFE’S PETITION GRANTED