vda. de Canilang v. CA

THELMA vda. de CANILANG v. CA and GREAT PACIFIC LIFE ASSURANCE

1993 / Feliciano / Petition for review on certiorari of CA decision

On June 1982, Jaime Canilang was diagnosed as suffering from sinus tachycardia. Two months later, he was found to have acute bronchitis. The next day, he applied for a “non-medical” insurance policy with Great Pacific and named his wife Thelma as his beneficiary. A year later, he died of congestive heart failure, anemia, and chronic anemia. When Thelma filed a claim with Great Pacific, it was denied on the ground that Jaime concealed material information.

            Thelma filed a complaint against Great Pacific with the Insurance Commission for recovery of the insurance proceeds. She testified that she was not aware of any serious illness suffered by Jaime, and that what she knew was that he died because of a kidney disorder. Great Pacific presented a physician who explained that Jaime’s application had been approved based on his medical declaration, and that medical examinations are required only in cases where applicant indicated that he has undergone medical consultation and hospitalization.

The Insurance Commission held that there was no intentional concealment on Jaime’s part. It also held that Great Pacific waived its right to inquire into Jaime’s health condition by issuing the policy despite the lack of answers to some of the pertinent questions in the application. It said BP 874, which voids an insurance contract WON concealment was made intentionally, was not applicable since the law became effective only on 1985.

CA reversed IC. CA said that the issue is WON there was material concealment, and not WON Canilang ‘intentionally’ made material concealment. It held that Jaime’s failure to disclose previous medical consultation and treatment constituted material information.

CANILANG FAILED TO DISCLOSE MATERIAL INFORMATION

The applicable law at that time was PD 1460 (Insurance Code of 1978). Under said law, the information concealed must be such which the concealing party knew and ought to have communicated—those which are material to the contract. The test of materiality is 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.

Canilang failed to disclose material information when he did not indicate under the caption ‘Exceptions’ that he twice consulted a doctor who found him to be suffering from sinus tachycardia and acute bronchitis. This failure to communicate must have been intentional, since Jaime could have been aware that his heartbeat would rise to high levels and that he consulted a doctor twice before applying for insurance.

The preceding statute, Act 2427, provided that a concealment, whether intentional or unintentional, entitles the injured party to rescind a contract of insurance. However, in PD 1460, this phrase was not present. [The current law, BP 874, has the phrase.] SC rejected the IC’s unspoken theory that the deletion of the phrase intended to limit the kinds of concealment to intentional concealments. The provision is properly read as referring to ANY concealment [“intentional” and “unintentional” cancel each other out].

CA AFFIRMED; PETITION DENIED