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

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

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.