GREPALIFE VS CA 316 SCRA 677 (1999)

FACTS:

Great Pacific Life Assurance Corporation (Grepalife) executed a contract of group life insurance with Development Bank of the Philippines
(DBP) wherein Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP.

One such loan mortgagor is Dr. Wilfredo Leuterio. In an application form, Dr. Leuterio answered questions concerning his test, attesting among
others that he does not have any heart conditions and that he is in good health to the best of his knowledge.

However, after about a year, Dr. Leuterio died due to “massive cerebral hemorrhage.” When DBP submitted a death claim to Grepalife, the latter
denied the claim, alleging that Dr. Leuterio did not disclose he had been suffering from hypertension, which caused his death. Allegedly, such
non-disclosure constituted concealment that justified the denial of the claim.

Hence, the widow of the late Dr. Leuterio filed a complaint against Grepalife for “Specific Performance with Damages.” Both the trial court and
the Court of Appeals found in favor of the widow and ordered Grepalife to pay DBP.

ISSUE:
Whether the CA erred in holding Grepalife liable to DBP as beneficiary in a group life insurance contract from a complaint filed by the widow of
the decedent/mortgagor

HELD:

The rationale of a group of insurance policy of mortgagors, otherwise known as the “mortgage redemption insurance,” is a device for the
protection of both the mortgagee and the mortgagor. On the part of the mortgagee, it has to enter into such form of contract so that in the event of
the unexpected demise of the mortgagor during the subsistence of the mortgage contract, the proceeds from such insurance will be applied to the
payment of the mortgage debt, thereby relieving the heirs of the mortgagor from paying the obligation. In a similar vein, ample protection is
given to the mortgagor under such a concept so that in the event of death, the mortgage obligation will be extinguished by the application of the
insurance proceeds to the mortgage indebtedness. In this type of policy insurance, the mortgagee is simply an appointee of the insurance fund.
Such loss-payable clause does not make the mortgagee a party to the contract.

The insured, being the person with whom the contract was made, is primarily the proper person to bring suit thereon. Subject to some exceptions,
insured may thus sue, although the policy is taken wholly or in part for the benefit of another person, such as a mortgagee.

And since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest or
not, and such person may recover it whatever the insured might have recovered, the widow of the decedent Dr. Leuterio may file the suit against
the insurer, Grepalife.

SUN LIFE V INGERSOLL G.R. NO. 16475 NOVEMBER 8, 1921

Facts:

Sun Life issued a policy on Dy Poco’s life for US$12,500. The contract stipulated that it would be payable to the said assuredor his assigns on the
21st day of February, 1938, and if he should die before that date, then it would be given to his legal representatives. The payment of a stipulated
annual premium during the period of the policy, or until the premiums had been completely paid for twenty years,

Dy Poco, was adjudged an insolvent by the trial court and Frank B. Ingersoll was appointed assignee of his estate. Poco died, and Tan Sit, was
appointed as the administratrix of his intestate estate.

Both Ingersoll, as assignee, and Tan Sit, as administratix of Dy Poco's estate, asserted claims to the proceeds of the policy. The lower court found
that Ingersoll had a better right and ordered Sun Life to pay.

The polic stipulated that after the payment of three full premiums, the assured could surrender the policy to the company for a "cash surrender
value." Butno more than two premiums had been paid upon the policy up to the time of the death of the assured. Hence this provision had not
become effective. It must therefore be accepted that this policy had no cash surrender value, at the time of the assured's death, either by contract or
by convention practice of the company in such cases.

Issue:

WON Ingersoll, as assignee, has a right to the proceeds of the insurance

Held: No. Sunlife must pay to the administratrix.

Ratio:

The property and interests of the insolvent which become vested in the assignee of the insolvent are specified in section 32 of the Insolvency Law.

Sec 32 declares that the assignment to be made by the clerk of the court "shall operate to vest in the assignee all of the estate of the
insolvent debtor not exempt by law from execution."

Moreover, by section 24, the court is required, upon making an order adjudicating any person insolvent, to stay any civil proceedings pending
against him; and it is declared in section 60 that no creditor whose debt is provable under the Act shall be allowed, after the commencement of
proceedings in insolvency, to prosecute to final judgment any action therefor against the debtor. In connection with the foregoing may be mentioned
subsections 1 and 2 of section 36, as well as the opening words of section 33, to the effect that the assignee shall have the right and power to recover
and to take into his possession, all of the estate, assets, and claims belonging to the insolvent, except such as are exempt by law from execution.

These provisions clearly evince an intention to vest in the assignee, for the benefit of all the creditors of the insolvent, such elements of property
and property right as could be reached and subjected by process of law by any single creditor suing alone. "leviable assets" and "assets in
insolvency" are practically coextensive terms. Hence, in determining what elements of value constitute assets in insolvency, the court is at liberty
to consider what elements of value are subject to be taken upon execution, and vice versa.

Section 48 of the Insolvency Law, didn’t declare items from the ownership of which the assignee is excluded. Moreover, all life insurance policies
are declared by law to be assignable, regardless of whether the assignee has an insurable interest in the life of the insured or not.

The assignee in insolvency acquired no beneficial interest in the policy of insurance in question; that its proceeds are not liable for any of the debts
provable against the insolvent in the pending proceedings, and that said proceeds should therefore be delivered to his administratrix.

In re McKinney: no beneficial interest in this policy had ever passed to the assignee over and beyond what constituted the surrender value, and
that the legal title to the policy was vested in the assignee merely in order to make the surrender value available to him. The conclusion therefore
was that the assignee should surrender the policy upon the payment to him of said value, as he was in fact directed to do.

A surrender value of a policy "arises from the fact that the fixed annual premiums is much in excess of the annual risk during the earlier years of
the policy, an excess made necessary in order to balance the deficiency of the same premium to meet the annual risk during the latter years of the
policy. This is the practical, though not the legal, relation of the company to this fund. "Upon the surrender of the policy before the death of
the assured, the company, to be relieved from all responsibility for the increased risk, which is represented by this accumulating reserve, could well
afford to surrender a considerable part of it to the assured, or his representative. A return of a part in some form or other is now Usually made."

The stipulation providing for a cash surrender value is a comparatively recent innovation in life insurance. Furthermore, the practice is common
among insurance companies even now to concede nothing in the character of cash surrender value, until three full premiums have been paid, as in
this case.

The courts are therefore practically unanimous in refusing to permit the assignee in insolvency to wrest from the insolvent a policy of insurance
which contains in it no present realizable assets.

NG GAN ZEE VS ASIAN CRUSADER LIFE ASSURANCE CORPORATION

122 SCRA 461 – Mercantile Law – Insurance Law – Concealment –Misrepresentation – Duty of Insurance Company to Make Inquiry

In May 1962, Kwong Nam applied for a 20-year endowment policy with Asian Crusader Life Assurance Corporation. Asian Crusader asked the
following question:
Has any life insurance company ever refused your application for insurance or for reinstatement of a lapsed policy offered you a policy different
from that applied for? If so, name company and date.
Kwong Nam answered “No” to the above question.
Kwong Nam was also examined by Asian Crusader’s medical examiner to whom he disclosed that he was once operated and a tumor was removed
from his stomach and such was “associated with ulcer of the stomach.”
Kwong Nam’s application was approved. In May 1963, he died. His widow, Ng Gan Zee, filed an insurance claim but Asian Crusader refused her
claim as it insisted that Kwong Nam concealed material facts from them when he was applying for the insurance; that he misrepresented the fact
that he was actually denied application by Insular Life when he was renewing his application with them; that Kwong Nam was actually operated
for peptic ulcer.
ISSUE: Whether or not Ng Gan Zee can collect the insurance claim.
HELD: Yes. Asian Crusader was not able to prove that Kwong Nam’s statement that Insular Life did not deny his insurance renewal with them
is untrue. In fact, evidence showed that in April 1962, Insular Life approved Kwong Nam’s request of reinstatement only with the condition that
Kwong Nam’s plan will be lowered from P50,000.00 to P20,000.00 considering his medical history.
Kwong Nam did not conceal anything from Asian Crusader. His statement that his operation, in which a tumor the size of a hen’s egg was removed
from his stomach, was only “associated with ulcer of the stomach” and not peptic ulcer can be considered as an expression made in good faith of
his belief as to the nature of his ailment and operation. Indeed, such statement must be presumed to have been made by him without knowledge of
its incorrectness and without any deliberate intent on his part to mislead Asian Crusader.
While it may be conceded that, from the viewpoint of a medical expert, the information communicated was imperfect, the same was nevertheless
sufficient to have induced Asian Crusader to make further inquiries about the ailment and operation of Kwong Nam. It has been held that where,
upon the face of the application, a question appears to be not answered at all or to be imperfectly answered, and the insurers issue a policy without
any further inquiry, they waive the imperfection of the answer and render the omission to answer more fully immaterial.

VDA CANILANG V CA G.R. NO. 92492 JUNE 17, 1993

Facts:

Canilang was found to have suffered from sinus tachycardia then bronchitis after a check-up from his doctor. The next day, he applied for a "non-
medical" insurance policy with respondent Grepalife naming his wife, Thelma Canilang, as his beneficiary. This was to the value of P19,700.

He died of "congestive heart failure," "anemia," and "chronic anemia." The widow filed a claim with Great Pacific which the insurer denied on the
ground that the insured had concealed material information from it.
Petitioner then filed a complaint against Great Pacific for recovery of the insurance proceeds. Petitioner testified that she was not aware of any
serious illness suffered by her late husband and her husband had died because of a kidney disorder. The doctor who gave the check up stated that
he treated the deceased for “sinus tachycardia” and "acute bronchitis."

Great Pacific presented a physician who testified that the deceased's insurance application had been approved on the basis of his medical declaration.
She explained that as a rule, medical examinations are required only in cases where the applicant has indicated in his application for insurance
coverage that he has previously undergone medical consultation and hospitalization.

The Insurance Commissioner ordered Great Pacific to pay P19,700 plus legal interest and P2,000.00 as attorney's fees. On appeal by Great Pacific,
the Court of Appeals reversed. It found that the failure of Jaime Canilang to disclose previous medical consultation and treatment constituted
material information which should have been communicated to Great Pacific to enable the latter to make proper inquiries.

Hence this petition by the widow.

Issue: Won Canilang was guilty of misrepresentation

Held: Yes. Petition denied.

Ratio:

There was a right of the insurance company to rescind the contract if it was proven that the insured committed fraud in not affirming that he was
treated for heart condition and other ailments stipulated.

Apart from certifying that he didn’t suffer from such a condition, Canilang also failed to disclose in the that he had twice consulted a doctor who
had found him to be suffering from "sinus tachycardia" and "acute bronchitis."

Under the Insurance Code:

Sec. 26. A neglect to communicate that which a party knows and ought to communicate, is called a concealment.

Sec. 28. Each party to a contract of insurance must communicate to the other, in good faith, all factors within his knowledge which are material to
the contract and as to which he makes no warranty, and which the other has not the means of ascertaining.

The information concealed must be information which the concealing party knew and should have communicated. The test of materiality of such
information is contained in Section 31:

Sec. 31. 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
the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.

The information which Jaime Canilang failed to disclose was material to the ability of Great Pacific to estimate the probable risk he presented as a
subject of life insurance. Had he disclosed his visits to his doctor, the diagnosis made and medicines prescribed by such doctor, in the
insurance application, it may be reasonably assumed that Great Pacific would have made further inquiries and would have probably refused to issue
a non-medical insurance policy.

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; that "probable
and reasonable influence of the facts" concealed must, of course, be determined objectively, by the judge ultimately.

The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain information to the insurer was not "intentional" in
nature, for the reason that Canilang believed that he was suffering from minor ailment like a common cold. Section 27 stated that:

Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance.

The failure to communicate must have been intentional rather than inadvertent. Canilang could not have been unaware that his heart beat would at
times rise to high and alarming levels and that he had consulted a doctor twice in the two (2) months before applying for non-medical insurance.
Indeed, the last medical consultation took place just the day before the insurance application was filed. In all probability, Jaime Canilang went to
visit his doctor precisely because of the ailment.

Canilang's failure to set out answers to some of the questions in the insurance application constituted concealment.

YU V CA G.R. NO. L-12465 MAY 29, 1959

Facts:

Yu Pang Eng submitted application for insurance consisting of the medical declaration made by him to the medical examiner and the report. Yu
then paid the premium in the sum of P591.70.

The insured, in his application for insurance, said “no” to ever having stomach disease, cancer, and fainting-spells. He also claimed to not have
consulted a physician regarding such diseases.

After submitting the form, he entered the hospital where he complained of dizziness, anemia, abdominal pains and tarry stools. He was found to
have peptic ulcer.

The insured entered another hospital for medical treatment but he died of "infiltrating medullary carcinoma, Grade 4, advanced cardiac and of lesser
curvature, stomach metastases spleen."
Yu Pang Cheng aimed to collect P10,000.00 on life of one Yu Pang Eng from an insurance company.

The company set up the defense that the insured was guilty of misrepresentation and concealment of material facts. They subsequently refused to
give the indemnity.

The trial court rendered judgment ordering defendant to pay plaintiff the sum of P10,000.00, plus P2,000.00 as attorney's fees. The Court of Appeals
reversed the decision of the trial court, holding that the insured was guilty of concealment of material facts. Hence the present petition.

Issue: Whether or not the insured is guilty of concealment of some facts material to the risk insured that consequently avoids the policy.

Held: Yes. Petition dismissed.

The first confinement took place from January 29, 1950 to February 11, while his application was submitted on September 5, 1950. When he gave
his answers to the policy, he concealed the ailment of which he was treated in the hospital.

The negative answers given by the insured regarding his previous ailment deprived defendant of the opportunity to make the necessary inquiry as
to the nature of his past illness so that as it may form its estimate relative to the approval of his application. Had defendant been given such
opportunity, the company would probably had never consented to the issuance of the policy in question. In fact, according to the death certificate,
the insured’s death may have direct connection with his previous illness.

Under the law, a neglect to communicate that which a party knows and ought to communicate, is called concealment. This entitles the insurer to
rescind the contract. The insured is required 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 to be determined not by the event but solely by the probable and
reasonable influence of the facts upon the party to whom the communication is due.

Argente vs. West Coast- “One ground for the rescission of a contract of insurance under the insurance Act is "a concealment", which in section 25
is defined "A neglect to communicate that which a party knows and ought to communicate."

“In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue, the
truth or falsity of the answers become the determining factor. If the policy was procured by fraudulent representations, the contract of insurance
was never legally existent. It can fairly be assumed that had the true facts been disclosed by the assured, the insurance would never have been
granted.”

GREAT PACIFIC V CA G.R. NO. L-31845 APRIL 30, 1979

Facts:

Ngo Hing filed an application with the Great Pacific for a twenty-year endowment policy in the amount of P50,000.00 on the life of his one-year
old daughter Helen. He supplied the essential data which petitioner Mondragon, the Branch Manager, wrote on the form. The latter paid the
annual premium the sum of P1,077.75 going over to the Company, but he retained the amount of P1,317.00 as his commission for being a duly
authorized agent of Pacific Life.

Upon the payment of the insurance premium, the binding deposit receipt was issued Ngo Hing. Likewise, petitioner Mondragon handwrote at the
bottom of the back page of the application form his strong recommendation for the approval of the insurance application. Then Mondragon received
a letter from Pacific Life disapproving the insurance application. The letter stated that the said life insurance application for 20-year endowment
plan is not available for minors below seven years old, but Pacific Life can consider the same under the Juvenile Triple Action Plan, and advised
that if the offer is acceptable, the Juvenile Non-Medical Declaration be sent to the company.

The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner Mondragon to private respondent Ngo
Hing. Instead, on May 6, 1957, Mondragon wrote back Pacific Life again strongly recommending the approval of the 20-year endowment insurance
plan to children, pointing out that since the customers were asking for such coverage.

Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of the insurance, but having failed in his effort, he filed the action for
the recovery before the Court of First Instance of Cebu, which ruled against him.

Issues:

1. Whether the binding deposit receipt constituted a temporary contract of the life insurance in question

2. Whether Ngo Hing concealed the state of health and physical condition of Helen Go, which rendered void the policy

Held: No. Yes. Petition dismissed.

The receipt was intended to be merely a provisional insurance contract. Its perfection was subject to compliance of the following conditions: (1)
that the company shall be satisfied that the applicant was insurable on standard rates; (2) that if the company does not accept the application and
offers to issue a policy for a different plan, the insurance contract shall not be binding until the applicant accepts the policy offered; otherwise, the
deposit shall be refunded; and (3) that if the companydisapproves the application, the insurance applied for shall not be in force at any time, and
the premium paid shall be returned to the applicant.

The receipt is merely an acknowledgment that the latter's branch office had received from the applicant the insurance premium and had accepted
the application subject for processing by the insurance company. There was still approval or rejection the same on the basis of whether or not the
applicant is "insurable on standard rates." Since Pacific Life disapproved the insurance application of respondent Ngo Hing, the binding deposit
receipt in question had never become in force at any time. The binding deposit receipt is conditional and does not insure outright. This was held in
Lim v Sun.

The deposit paid by private respondent shall have to be refunded by Pacific Life.
2. Ngo Hing had deliberately concealed the state of health of his daughter Helen Go. When he supplied data, he was fully aware that his one-year
old daughter is typically a mongoloid child. He withheld the fact material to the risk insured.

“The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and perfect candor or openness and honesty;
the absence of any concealment or demotion, however slight.”

The concealment entitles the insurer to rescind the contract of insurance.

PACIFIC V CA G.R. NO. L-41014 NOVEMBER 28, 1988

Facts:

An open fire insurance policy, was issued to Paramount Shirt Manufacturing by Oriental Assurance Corporation to indemnify P61,000.00, caused
by fire to the factory’s stocks, materials and supplies.

The insured was a debtor of Pacific Banking in the amount of (P800,000.00) and the goods described in the policy were held in trust by the
insured for Pacific Banking under trust receipts.

The policy was endorsed to Pacific Banking as mortgagee/ trustor of the properties insured, with the knowledge and consent of private respondent
to the effect that "loss if any under this policy is payable to the Pacific Banking Corporation".

A fire broke out on the premises destroying the goods contained in the building.

The bank sent a letter of demand to Oriental for indemnity.

The company wasn’t ready to give since it was awaiting the adjuster’s report.

The company then made an excuse that the insured had not filed any claim with it, nor submitted proof of loss which is a clear violation of Policy
Condition No.11, as a result, determination of the liability of private respondent could not be made.

Pacific Banking filed in the trial court an action for a sum of money for P61,000.00 against Oriental Assurance.

At the trial, petitioner presented communications of the insurance adjuster to Asian Surety revealing undeclared co-insurances with the following:
P30,000 with Wellington Insurance; P25,000 with Empire Surety and P250,000 with Asian Surety undertaken by insured Paramount on the same
property covered by its policy with Oriental whereas the only co-insurances declared in the subject policy are those of P30,000.00 with Malayan
P50,000.00 with South Sea and P25.000.00 with Victory.

The defense of fraud, in the form of non-declaration of co-insurances which was not pleaded in the answer, was also not pleaded in the Motion to
Dismiss.

The trial court denied the respondent’s motion. Oriental filed another motion to include additional evidence of the co-insurance which could
amount to fraud.

The trial court still made Oriental liable for P 61,000. The CA reversed the trial court decision. Pacific Banking filed a motion for reconsideration
of the said decision of the respondent Court of Appeals, but this was denied for lack of merit.

Issues:

1. WON unrevealed co-insurances Violated policy conditions No. 3

2. WON the insured failed to file the required proof of loss prior to court action.

Held: Yes. Petition dismissed.

Ratio:

1. Policy Condition No. 3 explicitly provides:

3. The Insured shall give notice to the Company of any insurance already effected, or which may subsequently be effected, covering any of the
property hereby insured, and unless such notice be given and the particulars of such insurance or insurances be stated in or endorsed on this
Policy by or on behalf of the Company before the occurrence of any loss or damage, all benefit under this policy shall be forfeited.

The insured failed to reveal before the loss three other insurances. Had the insurer known that there were many co-insurances, it could have
hesitated or plainly desisted from entering into such contract. Hence, the insured was guilty of clear fraud.

Concrete evidence of fraud or false declaration by the insured was furnished by the petitioner itself when the facts alleged in the policy under
clauses "Co-Insurances Declared" and "Other Insurance Clause" are materially different from the actual number of co-insurances taken over the
subject property.

As the insurance policy against fire expressly required that notice should be given by the insured of other insurance upon the same property, the
total absence of such notice nullifies the policy.

Petitioner points out that Condition No. 3 in the policy in relation to the "other insurance clause" supposedly to have been violated, cannot
certainly defeat the right of the petitioner to recover the insurance as mortgagee/assignee. Hence, they claimed that the purpose for which the
endorsement or assignment was made was to protect the mortgagee/assignee against any untoward act or omission of the insured. It would be
absurd to hold that petitioner is barred from recovering the insurance on account of the alleged violation committed by the insured.
It is obvious that petitioner has missed all together the import of subject mortgage clause which specifically provides:

“Loss, if any, under this policy, shall be payable to the PACIFIC BANKING CORPORATION Manila mortgagee/trustor as its interest may
appear, it being hereby understood and agreed that this insurance as to the interest of the mortgagee/trustor only herein, shall not be invalidated
by any act or neglect—except fraud or misrepresentation, or arson—of the mortgagor or owner/trustee of the property insured; provided, that in
case the mortgagor or owner/ trustee neglects or refuses to pay any premium, the mortgagee/ trustor shall, on demand pay the same.”

The paragraph clearly states the exceptions to the general rule that insurance as to the interest of the mortgagee, cannot be invalidated; namely:
fraud, or misrepresentation or arson. Concealment of the aforecited co-insurances can easily be fraud, or in the very least, misrepresentation.

Undoubtedly, it is but fair and just that where the insured who is primarily entitled to receive the proceeds of the policy has by its fraud and/or
misrepresentation, forfeited said right.

Petitioner further stressed that fraud which was not pleaded as a defense in private respondent's answer or motion to dismiss, should be deemed to
have been waived. It will be noted that the fact of fraud was tried by express or at least implied consent of the parties. Petitioner did not only
object to the introduction of evidence but on the contrary, presented the very evidence that proved its existence.

2. Generally, the cause of action on the policy accrues when the loss occurs, But when the policy provides that no action shall be brought unless
the claim is first presented extrajudicially in the manner provided in the policy, the cause of action will accrue from the time the insurer finally
rejects the claim for payment

In the case at bar, policy condition No. 11 specifically provides that the insured shall on the happening of any loss or damage give notice to
the company and shall within fifteen (15) days after such loss or damage deliver to the private respondent (a) a claim in writing giving
particular account as to the articles or goods destroyed and the amount of the loss or damage and (b) particulars of all other insurances, if any.

Twenty-four days after the fire did petitioner merely wrote letters to private respondent to serve as a notice of loss. It didn’t even furnish other
documents. Instead, petitioner shifted upon private respondent the burden of fishing out the necessary information to ascertain the
particular account of the articles destroyed by fire as well as the amount of loss. Since the required claim by insured, together with the
preliminary submittal of relevant documents had not been complied with, it follows that private respondent could not be deemed to have finally
rejected petitioner's claim and therefore there was no cause of action.

It appearing that insured has violated or failed to perform the conditions under No. 3 and 11 of the contract, and such violation or want of
performance has not been waived by the insurer, the insured cannot recover, much less the herein petitioner.

SUNLIFE V CA G.R. NO. 105135 JUNE 22, 1995

Facts:

Robert John B. Bacani procured a life insurance contract for himself from Sunlife. He was issued a policy for P100,000.00, with double indemnity
in case of accidental death. The designated beneficiary was his mother, Bernarda Bacani.

The insured died in a plane crash. Respondent Bernarda Bacani filed a claim with petitioner, seeking the benefits of the insurance policy taken by
her son. Petitioner conducted an investigation and its findings prompted it to reject the claim.

Sunlife informed Bacani that the insured did not disclose material facts relevant to the issuance of the policy, thus rendering the contract of insurance
voidable. A check representing the total premiums paid in the amount of P10,172.00 was attached to said letter.

Petitioner claimed that the insured gave false statements in his application. The deceased answered claimed that he consulted a Dr. Raymundo of
the Chinese General Hospital for cough and flu complications. The other questions were answered in the negative.

Petitioner discovered that two weeks prior to his application for insurance, the insured was examined and confined at the Lung Center of the
Philippines, where he was diagnosed for renal failure. During his confinement, the deceased was subjected to urinalysis tests.

Bernarda Bacani and her husband filed an action for specific performance against petitioner with the RTC. The court ruled in favor of the spouses
and ordered Sunlife to pay P100,000.00.

In ruling for private respondents, the trial court concluded that the facts concealed by the insured were made in good faith and under a belief that
they need not be disclosed. The court also held that the medial history was irrelevant because it wasn’t medical insurance.

The Court of Appeals affirmed the decision of the trial court. The appellate court ruled that petitioner cannot avoid its obligation by claiming
concealment because the cause of death was unrelated to the facts concealed by the insured. Petitioner's motion for reconsideration was denied.
Hence, this petition.

Issue: WON the insured was guilty of misrepresentation which made the contract void.

Held: Yes. Petition dismissed.

Section 26 of The Insurance Code required a party to a contract of insurance to communicate to the other, in good faith, all facts within his
knowledge which are material to the contract and as to which he makes no warranty, and which the other has no means of ascertaining.

“A neglect to communicate that which a party knows and ought to communicate, is called concealment.”

“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 terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to his health.

The information which the insured failed to disclose were material and relevant to the approval and issuance of the insurance policy. The matters
concealed would have definitely affected petitioner's action on his application, either by approving it with the corresponding adjustment for a
higher premium or rejecting the same. Moreover, a disclosure may have warranted a medical examination of the insured by petitioner in order for
it to reasonably assess the risk involved in accepting the application.

Vda. de Canilang v. Court of Appeals- 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.

“Good faith" is no defense in concealment. The insured's failure to disclose the fact that he was hospitalized raises grave doubts about his eligibility.
Such concealment was deliberate on his part.

The argument, that petitioner's waiver of the medical examination of the insured debunks the materiality of the facts concealed, is untenable.

Saturnino v. Philippine American Life Insurance " . . . 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 considerationin deciding whether to issue the policy or not . . . "

Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that the insured need not die of the
disease he had failed to disclose to the insurer. 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 as held in Henson.

FRANCISCA EGUARAS v. GREAT EASTERN LIFE ASSURANCE COMPANY, GR No. 10436, 1916-01-24

Facts:

hrough bill of exceptions by the counsel for the defendant, the Great Eastern Life Assurance Company, Ltd., from the judgment of September 14,
1914, whereby the Court of First Instance of Laguna sentenced it to pay to the plaintiff... the sum of P5,000, the value of the insurance policy in
question, with legal i

On April 14, 1913, counsel for Francisca Eguaras filed a written complaint in the said Laguna court, alleging as a cause of action that about
October 14, 1912, her son-in-law Dominador Albay had applied in writing to the defendant insurance company to insure his life for the... sum of
P5.000, naming... counsel for Francisca Eguaras filed a written complaint in the said Laguna court, alleging as a cause of action that about
October 14, 1912, her son-in-law Dominador Albay had applied in writing to the defendant insurance company to insure his life for the... sum of
P5.000, naming as the beneficiary in case of his death the plaintiff Francisca Eguaras; that after compliance with the requisites and the
investigation carried on by the defendant company, and it had been satisfied concerning the physical condition of the... applicant, it accepted the
application for insurance and on November 6,1912, issued policy No. 5592, Exhibit A, which has been made a part of the complaint, whereby the
said insurance company insured the life of the said Dominador Albay in the sum of P5,000,... payable in the event of his death to Francisca
Eguaras; that on December 6, 1912, said policy No. 5592 being in force, the insured, Dominador Albay, died in the municipality of Santa Cruz,
Laguna, and despite the fact that the beneficiary submitted satisfactory proofs of his... death and that the defendant company investigated the
event, still it refused and continues to refuse to pay to the plaintiff the value of the policy, Exhibit A, thereby causing damages estimated at
P1,000. The court was therefore asked to render judgment... against the Great Eastern Life Assurance Company, Ltd., and its general agent, West
G. Smith, by sentencing them to pay to the plaintiff the sum of P5,000, the value of policy No. 5592, plus the sum of P1,000 for damages inflicted
upon them, in... addition to the costs of the suit.

Issues:

whether the life insurance obtained by Dominador Albay, with the assistance of the insurance agent, Ponciano Remegio, is legal and valid or
whether on the contrary it was issued through fraud and deceit, and in such case,... whether the defendant, The Great Eastern Life Assurance
Company, Ltd., is still under obligation to pay the value thereof to the plaintiff

Ruling:

the insurance contract between the defendant and Dominador Albay is null and void because... it is false, fraudulent and illegal.

Article 1269 of the Civil Code states:

"There is deceit when by words or insidious machinations on the part of one of the contracting parties the other is induced to execute a contract
which without them he would not have made."

It is essential to the nature of the deceit, to which the foregoing article refers, that said deceit be prior to or contemporaneous with the consent that
is a necessary requisite for perfecting the contract, but not that it may have occurred or happened thereafter. A contract... is therefore deceitful, for
the execution whereof the consent of one of the parties has been secured by means of fraud, because he was persuaded by words or insidious
machinations, statements or false promises, and a defective consent wrung from him, even though such do not... constitute estafa or any other
criminal act subject to the penal law.

The defendant company accepted the application for insurance made by Dominador Albay and executed the contract comprised under articles
416 to 431 of the Code of Commerce, although for the perfecting thereof the insured, Albay, as he was not in good health, by connivance with...
the insurance company's agent, presented Castor Garcia to the physician Vidal, who was commissioned by the company to examine applicants for
life insurance and in view of the favorable report of the said physician, who reported and certified that the person examined by him under... the
name of Dominador Albay was in good health and possessed the qualifications required by said insurance company for perfecting the contract, so
the company freely and willingly consented to the execution thereof, effectively induced thereto by the result of the medical... examination and of
the favorable professional report issued in view of the appearance of an individual who was in good health, but different from the invalid who
was seeking to be insured and who died one month and twenty-three days after the insurance had been granted.
If there had been no substitution, if the insured Dominador Albay had been the person who appeared and was examined by the physician Vidal,
said Albay being manifestly different from Castor Garcia, the said physician would not have affirmed at the trial that it was Garcia who...
presented himself for the physical examination, accompanied by the insurance company's agent, at his residence in San Pablo, and he would have
failed to recognize him when he saw him in the court, nor is any mistake on the physician's part possible as the inspection and physical...
examination of the individual lasted for something like the space of an hour.

The supposition that Dominador Albay was not ill in October, 1912, would not explain why he did not present himself in person to be examined
by the physician Vidal; and when he failed to do so and by agreement with the agent Remigio was willing to be substituted by Castor

Garcia to the end that in any event no defect or personal quality should be discovered to hinder the perfecting of the insurance contract, such a
change in the person constitutes one of the means of fraud which, although it may not partake of the nature of a crime, essentially... nullifies the
insurance contract executed.

With this array of circumstantial evidence derived from facts duly proven as a result of the present suit, we get, if not a moral certainty, at least a
full conviction that when Castor Garcia presented himself to be examined by the physician Vidal in place of Dominador Albay,... serious deceit
occurred in perfecting the insurance contract, for had the agent of the company not been deceived it would not have granted the insurance applied
for by Albay, nor would it have executed the contract by virtue whereof payment is claimed of the value o£ the policy... obtained through fraud;
and consequently on such assumptions it is improper, nor is it permitted by the law, to order collection of the amount claimed.

QUA CHEE GAN VS LAW UNION AND ROCK INSURANCE CO., LTD.
98 Phil. 85 – Mercantile Law – Insurance Law – Ambiguity – Contract of Adherence

Qua Chee Gan owns four warehouses in Albay. He was using these warehouses to house crops like copra and hemp. All warehouses were insured
by Law Union and Rock Insurance for the amount of P370,000.00. The insurance states that Qua Chee Gan should install 11 hydrants in the
warehouses’ premises. Qua Chee Gan installed only two, but Law Union nevertheless went on with the insurance policy and collected premiums
from Qua Chee Gan. The insurance contract also provides that “oil” should not be stored within the premises of the warehouses.
In 1940, three of the warehouses were destroyed by fire. The damage caused amounted to P398k. Qua Chee Gan demanded insurance pay from
Law Union but the latter refused as it alleged that after investigation from their part, they found out that Qua Chee Gan caused the fire. Law Union
in fact sued Qua Chee Gan for Arson.
Qua Chee Gan was acquitted in the arson case. He then demanded that Law Union pay up. This time, Law Union averred that the insurance contract
is void because Qua Chee Gan failed to install 11 hydrants; and that gasoline was found in one of the warehouses.
ISSUE: Whether or not the insurance contract is void.
HELD: No. Law Union cannot exempt itself from paying Qua Chee Gan because it is estopped from invoking the same. It is a well settled rule of
law that an insurer which with knowledge of facts entitling it to treat a policy as no longer in force, receives and accepts a premium on the policy,
estopped to take advantage of the forfeiture.
Also, gasoline is not one of those items specifically prohibited from the premises of the warehouses. What was mentioned was the word “oil” which
could mean anything (from palm oil to lubricant and not gasoline or kerosene). This ambiguity is to be interpreted against Law Union because a
contract of insurance is a contract of adhesion. Further, oil is incidental to Qua Chee Gan’s business, it being used for motor fuel.

REGINA EDILLON VS MANILA BANKER LIFE ASSURANCE CORPORATION

117 SCRA 187 – Mercantile Law – Insurance Law – Representation – Collection of Premium Even Though Insured is Disqualified (Age)

In April 1969, Carmen Lapuz filled out an application form for insurance under Manila Banker Life Assurance Corporation. She stated that her
date of birth was July 11, 1904. Upon payment of the Php 20.00 premium, she was issued the insurance policy in April 1969. In May 1969, Carmen
Lapuz died in a vehicular accident. Regina Edillon, who was named a beneficiary in the insurance policy sought to collect the insurance proceeds but
Manila Banker denied the claim. Apparently, it is a rule of the insurance company that they were not to issue insurance policies to “persons who
are under the age of sixteen (16) years of age or over the age of sixty (60) years …” Note, that Lapuz was already 65 years old when she was
applying for the insurance policy.
ISSUE: Whether or not Edillon is entitled to the insurance claim as a beneficiary.
HELD: Yes. Carmen Lapuz did not conceal her true age. Despite this, the insurance company still received premium from Lapuz and issued the
corresponding insurance policy to her. When the accident happened, the insurance policy has been in force for 45 days already and such time was
already sufficient for Manila Banker to notice the fact that Lapuz is already over 60 years old and thereby cancel the insurance policy. If Manila
Banker failed to act, it is either because it was willing to waive such disqualification; or, through the negligence or incompetence of its employees
for which it has only itself to blame, it simply overlooked such fact. Under the circumstances, Manila Banker is already deemed in estoppe