Yu Pang Cheng v. CA

YU PANG CHENG v. CA

1959 / Bautista Angelo / Petition for review by certiorari of a CA decision

FACTS

On September 1950, Yu Pang Eng submitted his application for insurance to an insurance company [defendant]. 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. Upon payment of the first premium, the company issued to him an insurance policy. On December 1950, he went to St. Luke’s for medical treatment but he died two months later. According to the death certificate, he died of infiltrating medullary carcinoma, Grade 4, advanced cardiac and of lesser curvature, stomach metastases spleen.

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. 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.

It appears that the insured entered the Chinese General Hospital for medical treatment on 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.

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.