G.R. No. 105135 – SUNLIFE ASSURANCE COMPANY OF CANADA, petitioner, vs. The Hon. COURT OF APPEALS and Spouses ROLANDO and BERNARDA BACANI, respondents.
QUIASON, J.
Rule Synopsis
The insured need not die of the disease he had failed to disclose to the insurer, such failure to disclose, if material to the insurer in making an assessment of the risk and determination of whether the application should be accepted or not, is a ground for rescission.
Facts
Robert John B. Bacani had a non-medical insurance with Sunlife Assurance, with his mother Bernarda Bacani, as beneficiary. Barely after a year from procuring the policy, he died on a plane crash. His parents filed a claim with Sunlife. The latter refused for John’s failure to disclose material facts relevant to the issuance of the policy, i.e. his examination and confinement at the Lung Center of the Philippines, where he was diagnosed for renal failure, two weeks prior to his application for insurance.
Sps Bacani filed an action for specific performance with the RTC.
The RTC ruled in favor of Sps Bacani. The CA affirmed. The SC reversed.
Issues
- Were the information which John failed to disclose to Sunlife, material and relevant to the approval and issuance of the insurance policy?
- Did the waiver of medical examination by Sunlife debunk the materiality of the facts concealed?
- Must the cause of death be related to the facts concealed in order for the latter to constitute a valid defense for the insurer?
Ruling and Discussion
- Yes. The information which John failed to disclose to Sunlife were material and relevant to the approval and issuance of the insurance policy.
The application for the subject insurance specifically required the insured to disclose to the insurer matters relating to his health.
Materiality is to be 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. The materiality of the information withheld does not depend on the state of mind of the insured. Neither does it depend on the actual or physical events which ensue.
In this case, the information not disclosed by John would obviously affect his insurance application, as Sunlife would either approve the same for a higher premium, or reject the same altogether. - No. The waiver of medical examination by Sunlife did not debunk the materiality of the facts concealed.
The waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered, for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not (Saturnino v. Philippine American Life Insurance Company).
This argument would render then Sec. 27 of the Insurance Code, allowing the injured party to rescind the contract of insurance in case of concealment, ineffective. - No. The cause of death need not be related to the facts concealed in order for the latter to constitute a valid defense for the insurer.
The insured need not die of the disease he had failed to disclose to the insurer. It is sufficient that his nondisclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries.
Dispositive
Petition granted, assailed judgment reversed and set aside.