G.R. No. 92492 – THELMA VDA. DE CANILANG, petitioner, vs. HON. COURT OF APPEALS and GREAT PACIFIC LIFE ASSURANCE CORPORATION, respondents.
FELICIANO, J.
Rule Synopsis
An information or statement of fact is material when it can probably and reasonably influence the insurer in, among others, assessing the risk involved and accepting the application for insurance. Material concealment is a ground for rescission – whether made intentionally or unintentionally.
Facts
Jaime Canilang had a non-medical (life) insurance contract with Great Pacific, with his wife Thelma Canilang, as beneficiary. About a year after its effectivity, Jaime died of “congestive heart failure,” “anemia,” and “chronic anemia.” Thelma filed a claim with Great Pacific. The latter denied on ground of material concealment of information
Thelma filed an action before the Insurance Commission.
The IC ruled in favor of Thelma, ordering Great Pacific to pay her the insurance proceeds. The CA reversed finding material concealment on the part of Jaime. The SC affirmed.
Issues
- Did Jaime Canilang committed material concealment in his medical declaration for his insurance application with Great Pacific?
- Must the concealment by the insured be made “intentionally” to entitle the insurer to rescind the contract?
Ruling and Discussion
- Yes. Jaime Canilang committed material concealment in his medical declaration for his insurance application with Great Pacific.
Note: Jaime made the following medical declaration in his relation to his insurance application:
“(1) I have not been confined in any hospital, sanitarium or
infirmary, nor received any medical or surgical advice/attention within the last five (5) years.
(2) I have never been treated nor consulted a physician for a heart condition, high blood pressure, cancer, diabetes, lung, kidney, stomach disorder, or any other physical impairment.
(3) I am, to the best of my knowledge, in good health.
Exceptions:
I hereby declare that all the foregoing answers and statements are complete, true and correct. I hereby agree that if there be any fraud or misrepresentation in the above statements material to the risk, the INSURANCE COMPANY upon discovery within two (2) years from the effective date of insurance shall have the right to declare such insurance null and void. That the liabilities of the Company under the said Policy/ TA/Certificate shall accrue and begin only from the date of commencement of risk stated in the Policy/TA/Certificate, provided that the first premium is paid and the Policy/TA/Certificate is delivered to, and accepted by me in person, when I am in actual good health.
xxx”
The above notwithstanding the fact that he had consulted one Dr. Wilfredo B. Claudio twice, for which he was diagnosed with “sinus tachycardia” and “acute bronchitis,”and was prescribed medication.
This concealment of fact is considered material as it has probable and reasonable influence upon the insurer Great Pacific’s risk assessment and decision as to whether to accept the insurance application or not. Jaime’s diagnosis, as well as the medication prescribed for its treatment, were linked to heart diseases. As held by CA, and cited by SC, such information could have been very material to the insurer in determining the action to be taken on Canilang’s application for life insurance.
The materiality of the information withheld by Great Pacific did not depend upon the state of mind of Jaime Canilang. A man’s state of mind or subjective belief is not capable of proof in our judicial process, except through proof of external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn. Neither does materiality depend upon the actual or physical events which ensue. Materiality relates rather to the “probable and reasonable influence of the facts” upon the party to whom the communication should have been made, in assessing the risk involved in making or omitting to make further inquiries and in accepting the application for insurance. - No. The concealment by the insured need not be made “intentionally” to entitle the insurer to rescind the contract.
Evolution of the rule on concealment in Philippine Insurance Laws:
Act No. 2427 (1914 – 1974) Sec. 26. A concealment, whether intentional or unintentional, entitles the injured party to rescind a contract of insurance.
Insurance Code of 1978 (1975 – 1985; Relevant Law). Sec. 27. A concealment entitles the injured party to rescind a contract of insurance.
B.P. Blg. 874 (1985; Amendment to the IC of 1978). Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance.
The net result of the phrase “whether intentional or unintentional” is precisely to leave unqualified the term “concealment.” The deletion of the said phrase in the Insurance Code of 1978 is not intended to limit the kinds of concealment which generate a right to rescind on the part of the injured party to “intentional concealments.” Section 27 of the Insurance Code of 1978 is properly read as referring to “any concealment” without regard to whether such concealment is intentional or unintentional.
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. Jaime could not have been unaware of his own symptoms related to heart disease, e.g. heartbeat rising at alarming levels.
The Court also found it difficult to take seriously the argument that Great Pacific had waived inquiry into the concealment by issuing the insurance policy notwithstanding Canilang’s failure to set out answers to some of the questions in the insurance application. The said failure precisely constituted concealment.
Dispositive
Petition denied. Appealed decision affirmed.