insurance batch 3

8/10/2019 Insurance Batch 3

1/47

G.R. No. 186983 February 22, 2012

MA. LOURDES S. FLORENDO,Petitioner,vs.

PHILAM PLANS, INC., PERLA ABCEDE MA. CELESTE ABCEDE,Respondents.

D E C I S I O N

ABAD, J.:

This case is about an insureds alleged concealment in his pension plan application of his truestate of health and its effect on the life insurance portion of that plan in case of death.

The Facts and the Case

On October 23, 1997 Manuel Florendo filed an application for comprehensive pension plan with

respondent Philam Plans, Inc. (Philam Plans) after some convincing by respondent Perla Abcede.The plan had a pre-need price of P997,050.00, payable in 10 years, and had a maturity value of

P2,890,000.00 after 20 years.1Manuel signed the application and left to Perla the task of

supplying the information needed in the application.2Respondent Ma. Celeste Abcede, Perlas

daughter, signed the application as sales counselor.3

Aside from pension benefits, the comprehensive pension plan also provided life insurancecoverage to Florendo.

4This was covered by a Group Master Policy that Philippine American

Life Insurance Company (Philam Life) issued to Philam Plans.5Under the master policy, Philam

Life was to automatically provide life insurance coverage, including accidental death, to all who

signed up for Philam Plans comprehensive pension plan.6If the plan holder died before the

maturity of the plan, his beneficiary was to instead receive the proceeds of the life insurance,equivalent to the pre-need price. Further, the life insurance was to take care of any unpaid

premium until the pension plan matured, entitling the beneficiary to the maturity value of thepension plan.

7

On October 30, 1997 Philam Plans issued Pension Plan Agreement PP430055848to Manuel,

with petitioner Ma. Lourdes S. Florendo, his wife, as beneficiary. In time, Manuel paid his

quarterly premiums.9

Eleven months later or on September 15, 1998, Manuel died of blood poisoning. Subsequently,

Lourdes filed a claim with Philam Plans for the payment of the benefits under her husbands

plan.

10

Because Manuel died before his pension plan matured and his wife was to get only thebenefits of his life insurance, Philam Plans forwarded her claim to Philam Life.11

On May 3, 1999 Philam Plans wrote Lourdes a letter,12

declining her claim. Philam Life foundthat Manuel was on maintenance medicine for his heart and had an implanted pacemaker.

Further, he suffered from diabetes mellitus and was taking insulin. Lourdes renewed her demand

for payment under the plan13

but Philam Plans rejected it,14

prompting her to file the present
http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt8http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt8http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt11http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt11http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt11http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt11http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt8http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt1


2/47

action against the pension plan company before the Regional Trial Court (RTC) of Quezon

City.15

On March 30, 2006 the RTC rendered judgment,16

ordering Philam Plans, Perla and Ma. Celeste,

solidarily, to pay Lourdes all the benefits from her husbands pension plan, namely:

P997,050.00, the proceeds of his term insurance, and P2,890,000.00 lump sum pension benefitupon maturity of his plan; P100,000.00 as moral damages; and to pay the costs of the suit. The

RTC ruled that Manuel was not guilty of concealing the state of his health from his pension plan

application.

On December 18, 2007 the Court of Appeals (CA) reversed the RTC decision ,17

holding that

insurance policies are traditionally contracts uberrimae fidae or contracts of utmost good faith.As such, it required Manuel to disclose to Philam Plans conditions affecting the risk of which he

was aware or material facts that he knew or ought to know.18

Issues Presented

The issues presented in this case are:

1. Whether or not the CA erred in finding Manuel guilty of concealing his illness when

he kept blank and did not answer questions in his pension plan application regarding theailments he suffered from;

2. Whether or not the CA erred in holding that Manuel was bound by the failure of

respondents Perla and Ma. Celeste to declare the condition of Manuels health in the

pension plan application; and

3. Whether or not the CA erred in finding that Philam Plans approval of Manuelspension plan application and acceptance of his premium payments precluded it from

denying Lourdes claim.

Rulings of the Court

One. Lourdes points out that, seeing the unfilled spaces in Manuels pension plan application

relating to his medical history, Philam Plans should have returned it to him for completion. SincePhilam Plans chose to approve the application just as it was, it cannot cry concealment on

Manuels part. Further, Lourdes adds that Philam Plans never queried Manuel directly regarding

the state of his health. Consequently, it could not blame him for not mentioning it.19

But Lourdes is shifting to Philam Plans the burden of putting on the pension plan application the

true state of Manuels health. She forgets that since Philam Plans waived medical examination

for Manuel, it had to rely largely on his stating the truth regarding his health in his application.For, after all, he knew more than anyone that he had been under treatment for heart condition and

diabetes for more than five years preceding his submission of that application. But he kept those

crucial facts from Philam Plans.
http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt15


3/47


4/47

Lourdes next points out that it made no difference if Manuel failed to reveal the fact that he had a

pacemaker implant in the early 70s since this did not fall within the five-year timeframe that the

disclosure contemplated.24

But a pacemaker is an electronic device implanted into the body andconnected to the wall of the heart, designed to provide regular, mild, electric shock that

stimulates the contraction of the heart muscles and restores normalcy to the heartbeat.25

That

Manuel still had his pacemaker when he applied for a pension plan in October 1997 is anadmission that he remained under treatment for irregular heartbeat within five years precedingthat application.

Besides, as already stated, Manuel had been taking medicine for his heart condition and diabetes

when he submitted his pension plan application. These clearly fell within the five-year period.

More, even if Perlas knowledge of Manuels pacemaker may be applied to Philam Plans under

the theory of imputed knowledge,26

it is not claimed that Perla was aware of his two otherafflictions that needed medical treatments. Pursuant to Section 27

27of the Insurance Code,

Manuels concealment entitles Philam Plans to rescind its contract of insurance with him.

Two. Lourdes contends that the mere fact that Manuel signed the application in blank and letPerla fill in the required details did not make her his agent and bind him to her concealment of

his true state of health. Since there is no evidence of collusion between them, Perlas fault mustbe considered solely her own and cannot prejudice Manuel.

28

But Manuel forgot that in signing the pension plan application, he certified that he wrote all theinformation stated in it or had someone do it under his direction. Thus:

APPLICATION FOR PENSION PLAN(Comprehensive)

I hereby apply to purchase from PHILAM PLANS, INC. a Pension Plan Program describedherein in accordance with the General Provisions set forth in this application and hereby certify

that the date and other information stated herein are written by me or under my direction. x x x.29

(Emphasis supplied)

Assuming that it was Perla who filled up the application form, Manuel is still bound by what it

contains since he certified that he authorized her action. Philam Plans had every right to act onthe faith of that certification.

Lourdes could not seek comfort from her claim that Perla had assured Manuel that the state ofhis health would not hinder the approval of his application and that what is written on his

application made no difference to the insurance company. But, indubitably, Manuel was made

aware when he signed the pension plan application that, in granting the same, Philam Plans and

Philam Life were acting on the truth of the representations contained in that application. Thus:

DECLARATIONS AND REPRESENTATIONS

x x x x
http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt24http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt24http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt24http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt27http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt27http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt29http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt29http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt29http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt29http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt27http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt24


5/47

I agree that the insurance coverage of this application is based on the truth of the foregoing

representations and is subject to the provisions of the Group Life Insurance Policy issued by

THE PHILIPPINE AMERICAN LIFE INSURANCE CO. to PHILAM PLANS, INC.30

(Emphasis supplied)

As the Court said in New Life Enterprises v. Court of Appeals:

31

It may be true that x x x insured persons may accept policies without reading them, and that this

is not negligence per se. But, this is not without any exception. It is and was incumbent uponpetitioner Sy to read the insurance contracts, and this can be reasonably expected of him

considering that he has been a businessman since 1965 and the contract concerns indemnity in

case of loss in his money-making trade of which important consideration he could not have beenunaware as it was precisely the reason for his procuring the same.

32

The same may be said of Manuel, a civil engineer and manager of a construction company.33

Hecould be expected to know that one must read every document, especially if it creates rights and

obligations affecting him, before signing the same. Manuel is not unschooled that the Court mustcome to his succor. It could reasonably be expected that he would not trifle with something that

would provide additional financial security to him and to his wife in his twilight years.

Three. In a final attempt to defend her claim for benefits under Manuels pension plan, Lourdespoints out that any defect or insufficiency in the information provided by his pension planapplication should be deemed waived after the same has been approved, the policy has been

issued, and the premiums have been collected.34

The Court cannot agree. The comprehensive pension plan that Philam Plans issued contains a

one-year incontestability period. It states:

VIII. INCONTESTABILITY

After this Agreement has remained in force for one (1) year, we can no longer contest for health

reasons any claim for insurance under this Agreement, except for the reason that installment has

not been paid (lapsed), or that you are not insurable at the time you bought this pension programby reason of age. If this Agreement lapses but is reinstated afterwards, the one (1) year

contestability period shall start again on the date of approval of your request for

reinstatement.35

1wphi1

The above incontestability clause precludes the insurer from disowning liability under the policy

it issued on the ground of concealment or misrepresentation regarding the health of the insuredafter a year of its issuance.

Since Manuel died on the eleventh month following the issuance of his plan,36

the one yearincontestability period has not yet set in. Consequently, Philam Plans was not barred from

questioning Lourdes entitlement to the benefits of her husbands pension plan.
http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt30http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt30http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt30http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt31http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt31http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt31http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt32http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt32http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt32http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt33http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt33http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt33http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt34http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt34http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt34http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt35http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt35http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt36http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt36http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt36http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt36http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt35http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt34http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt33http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt32http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt31http://www.lawphil.net/judjuris/juri2012/feb2012/gr_186983_2012.html#fnt30


6/47

WHEREFORE, the Court AFFIRMS in its entirety the decision of the Court of Appeals in CA-

G.R. CV 87085 dated December 18, 2007.

SO ORDERED.

G.R. No. 92492 June 17, 1993

THELMA VDA. DE CANILANG, petitioner,vs.HON. COURT OF APPEALS and GREAT PACIFIC LIFE ASSURANCECORPORATION, respondents.

Simeon C. Sato for petitioner.

FELICIANO, J.:

On 18 June 1982, Jaime Canilang consulted Dr. Wilfredo B. Claudio and wasdiagnosed as suffering from "sinus tachycardia." The doctor prescribed the following frohim: Trazepam, a tranquilizer; and Aptin, a beta-blocker drug. Mr. Canilang consultedthe same doctor again on 3 August 1982 and this time was found to have "acutebronchitis."

On next day, 4 August 1982, Jaime Canilang applied for a "non-medical" insurancepolicy with respondent Great Pacific Life Assurance Company ("Great Pacific") naminghis wife, Thelma Canilang, as his beneficiary.1Jaime Canilang was issued ordinary lifeinsurance Policy No. 345163, with the face value of P19,700, effective as of 9 August1982.

On 5 August 1983, Jaime Canilang died of "congestive heart failure," "anemia," and"chronic anemia."2Petitioner, widow and beneficiary of the insured, filed a claim withGreat Pacific which the insurer denied on 5 December 1983 upon the ground that theinsured had concealed material information from it.

Petitioner then filed a complaint against Great Pacific with the Insurance Commissionfor recovery of the insurance proceeds. During the hearing called by the InsuranceCommissioner, petitioner testified that she was not aware of any serious illness sufferedby her late husband3and that, as far as she knew, her husband had died because of akidney disorder.4A deposition given by Dr. Wilfredo Claudio was presented by

petitioner. There Dr. Claudio stated that he was the family physician of the deceasedJaime Canilang5and that he had previously treated him for "sinus tachycardia" and"acute bronchitis."6Great Pacific for its part presented Dr. Esperanza Quismorio, a

physicianand a medical underwriter working for Great Pacific. 7She testified that the deceased'sinsurance application had been approved on the basis of his medical declaration.8Sheexplained that as a rule, medical examinations are required only in cases where the


7/47

applicant has indicated in his application for insurance coverage that he has previouslyundergone medical consultation and hospitalization.9

In a decision dated 5 November 1985, Insurance Commissioner Armando Ansaldoordered Great Pacific to pay P19,700 plus legal interest and P2,000.00 as attorney's

fees after holding that:

1. the ailment of Jaime Canilang was not so serious that, even if it had been disclosed, itwould not have affected Great Pacific's decision to insure him;

2. Great Pacific had waived its right to inquire into the health condition of the applicant bythe issuance of the policy despite the lack of answers to "some of the pertinentquestions" in the insurance application;

3. there was no intentional concealment on the part of the insured Jaime Canilang as hehad thought that he was merely suffering from a minor ailment and simple cold;

10and

4. Batas Pambansa Blg. 847 which voids an insurance contract, whether or not

concealment was intentionally made, was not applicable to Canilang's case as that lawbecame effective only on 1 June 1985.

On appeal by Great Pacific, the Court of Appeals reversed and set aside the decision ofthe Insurance Commissioner and dismissed Thelma Canilang's complaint and GreatPacific's counterclaim. The Court of Appealed found that the use of the word"intentionally" by the Insurance Commissioner in defining and resolving the issueagreed upon by the parties at pre-trial before the Insurance Commissioner was notsupported by the evidence; that the issue agreed upon by the parties had been whetherthe deceased insured, Jaime Canilang, made a material concealment as the state of hishealth at the time of the filing of insurance application, justifying respondent's denial of

the claim. The Court of Appeals also found that the failure of Jaime Canilang to discloseprevious medical consultation and treatment constituted material information whichshould have been communicated to Great Pacific to enable the latter to make properinquiries. The Court of Appeals finally held that the Ng Gan Zee case which hadinvolved misrepresentation was not applicable in respect of the case at bar whichinvolves concealment.

Petitioner Thelma Canilang is now before this Court on a Petition for Review onCertiorari alleging that:

1. . . . the Honorable Court of Appeals, speaking with due respect, erred in not holding

that the issue in the case agreed upon between the parties before the InsuranceCommission is whether or not Jaime Canilang "intentionally" made material concealmentin stating his state of health;

2. . . . at any rate, the non-disclosure of certain facts about his previous health conditionsdoes not amount to fraud and private respondent is deemed to have waived inquirythereto.

11


8/47

The medical declaration which was set out in the application for insurance executed byJaime Canilang read as follows:

MEDICAL DECLARATION

I hereby declare that:

(1) I have not been confined in any hospital, sanitarium or infirmary, nor receive anymedical 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 bloodpressure, cancer, diabetes, lung, kidney, stomach disorder, or any other physicalimpairment.

(3) I am, to the best of my knowledge, in good health.

EXCEPTIONS:

________________________________________________________________________________

GENERAL DECLARATION

I hereby declare that all the foregoing answers and statements are complete, true andcorrect. I hereby agree that if there be any fraud or misrepresentation in the abovestatements 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 suchinsurance null and void. That the liabilities of the Company under the saidPolicy/TA/Certificate shall accrue and begin only from the date of commencement of riskstated in the Policy/TA/Certificate, provided that the first premium is paid and thePolicy/TA/Certificate is delivered to, and accepted by me in person, when I am in actual

good health.

Signed at Manila his 4th day of August, 1992.


9/47

We note that in addition to the negative statements made by Mr. Canilang in paragraph 1 and 2 of themedical declaration, he failed to disclose in the appropriate space, under the caption "Exceptions," that hehad twice consulted Dr. Wilfredo B. Claudio who had found him to be suffering from "sinus tachycardia"

and "acute bronchitis."

The relevant statutory provisions as they stood at the time Great Pacific issued the contract of insuranceand at the time Jaime Canilang died, are set out in P.D. No. 1460, also known as the Insurance Code of1978, which went into effect on 11 June 1978. These provisions read as follows:

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

xxx xxx xxx

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 whichhe makes no warranty, and which the other has not the means of ascertaining.(Emphasis supplied)

Under the foregoing provisions, the information concealed must be information which the concealing partyknew and "ought to [have] communicate[d]," that is to say, information which was "material to thecontract." The test of materiality is contained in Section 31 of the Insurance Code of 1978 which reads:


10/47

Sec. 31. Materially is to be determined not by the event, but solely by the probable andreasonable influence of the facts upon the party to whom the communication is due, informing his estimate of the disadvantages of the proposed contract, or in making hisinquiries. (Emphasis supplied)

"Sinus tachycardia" is considered present "when the heart rate exceeds 100 beats per minute."13The

symptoms of this condition include pounding in the chest and sometimes faintness and weakness of theperson affected. The following elaboration was offered by Great Pacific and set out by the Court ofAppeals in its Decision:

Sinus tachycardia is defined as sinus-initiated; heart rate faster than 100 beats perminute. (Harrison' s Principles of Internal Medicine, 8th ed. [1978], p. 1193.) It is, amongothers, a common reaction to heart disease, including myocardial infarction, and heartfailure per se. (Henry J.L. Marriot, M.D., Electrocardiography, 6th ed., [1977], p. 127.)The medication prescribed by Dr. Claudio for treatment of Canilang's ailment on June 18,1982, indicates the condition that said physician was trying to manage. Thus, heprescribed Trazepam, (Philippine Index of Medical Specialties (PIMS), Vol. 14, No. 3,Dec. 1985, p. 112) which is anti-anxiety, anti-convulsant, muscle-relaxant; and Aptin,(Idem, p. 36) a cardiac drug, for palpitations and nervous heart. Such treatment could

have been a very material information to the insurer in determining the action to be takeon Canilang's application for life insurance coverage.14

We agree with the Court of Appeals that the information which Jaime Canilang failed to disclose wasmaterial to the ability of Great Pacific to estimate the probable risk he presented as a subject of lifeinsurance. Had Canilang disclosed his visits to his doctor, the diagnosis made and medicines prescribedby such doctor, in the insurance application, it may be reasonably assumed that Great Pacific would havemade further inquiries and would have probably refused to issue a non-medical insurance policy or, at thevery least, required a higher premium for the same coverage.

15The materiality of the information

withheld by Great Pacific did not depend upon the state of mind of Jaime Canilang. A man's state of mindor subjective belief is not capable of proof in our judicial process, except through proof of external acts orfailure to act from which inferences as to his subjective belief may be reasonably drawn. Neither doesmateriality 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 havebeen made, in assessing the risk involved in making or omitting to make further inquiries and in acceptingthe application for insurance; that "probable and reasonable influence of the facts" concealed must, ofcourse, be determined objectively, by the judge ultimately.

The insurance Great Pacific applied for was a "non-medical" insurance policy. In Saturnino v. Philippine-American Life Insurance Company,

16this Court held that:

. . . if anything, the waiver of medical examination [in a non-medical insurance contract]renders even more material the information required of the applicant concerning previouscondition of health and diseases suffered, for such information necessarily constitutes animportant factor which the insurer takes into consideration in deciding whether to issuethe policy or not . . . .

17(Emphasis supplied)

The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain informationto the insurer was not "intentional" in nature, for the reason that Jaime Canilang believed that he wassuffering from minor ailment like a common cold. Section 27 of the Insurance Code of 1978 as it existedfrom 1974 up to 1985, that is, throughout the time range material for present purposes, provided that:

Sec. 27. A concealment entitles the injured party to rescind a contract of insurance.

The preceding statute, Act No. 2427, as it stood from 1914 up to 1974, had provided:


11/47

Sec. 26. A concealment, whether intentional or unintentional, entitles the injured party torescind a contract of insurance. (Emphasis supplied)

Upon the other hand, in 1985, the Insurance Code of 1978 was amended byB.P. Blg. 874. This subsequent statute modified Section 27 of the Insurance Code of 1978 so as to readas follows:

Sec. 27. A concealment whether intentional or unintentional entitles the injured party torescind a contract of insurance. (Emphasis supplied)

The unspoken theory of the Insurance Commissioner appears to have been that by deleting the phrase"intentional or unintentional," the Insurance Code of 1978 (prior to its amendment by B.P. Blg. 874)intended to limit the kinds of concealment which generate a right to rescind on the part of the injured partyto "intentional concealments." This argument is not persuasive. As a simple matter of grammar, it may benoted that "intentional" and "unintentional" cancel each other out. The net result therefore of the phrase"whether intentional or unitentional" is precisely to leave unqualified the term "concealment." Thus,Section 27 of the Insurance Code of 1978 is properly read as referring to "any concealment" withoutregard to whether such concealment is intentional or unintentional. The phrase "whether intentional orunintentional" was in fact superfluous. The deletion of the phrase "whether intentional or unintentional"

could not have had the effect of imposing an affirmative requirement that a concealment must beintentional if it is to entitle the injured party to rescind a contract of insurance. The restoration in 1985 byB.P. Blg. 874 of the phrase "whether intentional or unintentional" merely underscored the fact that allthroughout (from 1914 to 1985), the statute did not require proof that concealment must be "intentional" inorder to authorize rescission by the injured party.

In any case, in the case at bar, the nature of the facts not conveyed to the insurer was such that thefailure to communicate must have been intentional rather than merely inadvertent. For Jaime Canilangcould not have been unaware that his heart beat would at times rise to high and alarming levels and thathe 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 allprobability, Jaime Canilang went to visit his doctor precisely because of the discomfort and concernbrought about by his experiencing "sinus tachycardia."

We find it difficult to take seriously the argument that Great Pacific had waived inquiry into theconcealment by issuing the insurance policy notwithstanding Canilang's failure to set out answers tosome of the questions in the insurance application. Such failure precisely constituted concealment on thepart of Canilang. Petitioner's argument, if accepted, would obviously erase Section 27 from the InsuranceCode of 1978.

It remains only to note that the Court of Appeals finding that the parties had not agreed in the pretrialbefore the Insurance Commission that the relevant issue was whether or not Jaime Canilang hadintentionally concealed material information from the insurer, was supported by the evidence of record,i.e., the Pre-trial Order itself dated 17 October 1984 and the Minutes of the Pre-trial Conference dated 15October 1984, which "readily shows that the word "intentional" does not appear in the statement ordefinition of the issue in the said Order and Minutes."

18

WHEREFORE, the Petition for Review is DENIED for lack of merit and the Decision of the Court ofAppeals dated 16 October 1989 in C.A.-G.R. SP No. 08696 is hereby AFFIRMED. No pronouncement asto the costs.

SO ORDERED.

G.R. No. L-30685 May 30, 1983


12/47

NG GAN ZEE, plaintiff-appellee,vs.ASIAN CRUSADER LIFE ASSURANCE CORPORATION, defendant-appellant.

Alberto Q. Ubay for plaintiff-appellee.

Santiago F. A lidio for defendant-appellant.

ESCOLIN, J .:

This is an appeal from the judgment of the Court of First Instance of Manila, orderingthe appellant Asian-Crusader Life Assurance Corporation to pay the face value of aninsurance policy issued on the life of Kwong Nam the deceased husband of appellee NgGan Zee. Misrepresentation and concealment of material facts in obtaining the policy

were pleaded to avoid the policy. The lower court rejected the appellant's theory andordered the latter to pay appellee "the amount of P 20,000.00, with interest at the legalrate from July 24, 1964, the date of the filing of the complaint, until paid, and the costs. "

The Court of Appeals certified this appeal to Us, as the same involves solely a questionof law.

On May 12, 1962, Kwong Nam applied for a 20-year endowment insurance on his lifefor the sum of P20,000.00, with his wife, appellee Ng Gan Zee as beneficiary. On thesame date, appellant, upon receipt of the required premium from the insured, approvedthe application and issued the corresponding policy. On December 6, 1963, Kwong

Nam died of cancer of the liver with metastasis. All premiums had been religiously paidat the time of his death.

On January 10, 1964, his widow Ng Gan Zee presented a claim in due form to appellantfor payment of the face value of the policy. On the same date, she submitted therequired proof of death of the insured. Appellant denied the claim on the ground that theanswers given by the insured to the questions appealing in his application for lifeinsurance were untrue.

Appellee brought the matter to the attention of the Insurance Commissioner, the Hon.Francisco Y. Mandamus, and the latter, after conducting an investigation, wrote the

appellant that he had found no material concealment on the part of the insured and that,therefore, appellee should be paid the full face value of the policy. This opinion of theInsurance Commissioner notwithstanding, appellant refused to settle its obligation.

Appellant alleged that the insured was guilty of misrepresentation when he answered"No" to the following question appearing in the application for life insurance-


13/47

Has any life insurance company ever refused your application for insurance or forreinstatement of a lapsed policy or offered you a policy different from that applied for? If,so, name company and date.

In its brief, appellant rationalized its thesis thus:

... As pointed out in the foregoing summary of the essential facts in this case, the insuredhad in January, 1962, applied for reinstatement of his lapsed life insurance policy with theInsular Life Insurance Co., Ltd, but this was declined by the insurance company, althoughlater on approved for reinstatement with a very high premium as a result of his medicalexamination. Thus notwithstanding the said insured answered 'No' to the [above]question propounded to him. ...

1

The lower court found the argument bereft of factual basis; and We quote with approvalits disquisition on the matter-

On the first question there is no evidence that the Insular Life Assurance Co., Ltd. everrefused any application of Kwong Nam for insurance. Neither is there any evidence that

any other insurance company has refused any application of Kwong Nam for insurance.

... The evidence shows that the Insular Life Assurance Co., Ltd. approved Kwong Nam'srequest for reinstatement and amendment of his lapsed insurance policy on April 24,1962 [Exh. L-2 Stipulation of Facts, Sept. 22, 1965). The Court notes from saidapplication for reinstatement and amendment, Exh. 'L', that the amount applied for wasP20,000.00 only and not for P50,000.00 as it was in the lapsed policy. The amount of thereinstated and amended policy was also for P20,000.00. It results, therefore, that whenon May 12, 1962 Kwong Nam answered 'No' to the question whether any life insurancecompany ever refused his application for reinstatement of a lapsed policy he did notmisrepresent any fact.

... the evidence shows that the application of Kwong Nam with the Insular Life Assurance

Co., Ltd. was for the reinstatement and amendment of his lapsed insurance policy-PolicyNo. 369531 -not an application for a 'new insurance policy. The Insular Life AssuranceCo., Ltd. approved the said application on April 24, 1962. Policy No. 369531 wasreinstated for the amount of P20,000.00 as applied for by Kwong Nam [Exhs. 'L', 'L-l' and'L-2']. No new policy was issued by the Insular Life Assurance Co., Ltd. to Kwong Nam inconnection with said application for reinstatement and amendment. Such being the case,the Court finds that there is no misrepresentation on this matter.

2

Appellant further maintains that when the insured was examined in connection with hisapplication for life insurance, he gave the appellant's medical examiner false andmisleading information as to his ailment and previous operation. The alleged falsestatements given by Kwong Nam are as follows:

Operated on for a Tumor [mayoma] of the stomach. Claims that Tumor has beenassociated with ulcer of stomach. Tumor taken out was hard and of a hen's egg size.Operation was two [2] years ago in Chinese General Hospital by Dr. Yap. Now, claims heis completely recovered.

To demonstrate the insured's misrepresentation, appellant directs Our attention to:


14/47


15/47


16/47

This petition for review, under Rule 45 of the Rules of Court, assails the Decisioni[1]dated May

17, 1993, of the Court of Appeals and its Resolutionii[2]dated January 4, 1994 in CA-G.R. CV

No. 18341. The appellate court affirmed in toto the judgment of the Misamis Oriental RegionalTrial Court, Branch 18, in an insurance claim filed by private respondent against Great Pacific

Life Assurance Co. The dispositive portion of the trial courts decision reads:

WHEREFORE, judgment is rendered adjudging the defendant GREAT PACIFIC LIFE

ASSURANCE CORPORATION as insurer under its Group policy No. G-1907, in relation to

Certification B-18558 liable and ordered to pay to the DEVELOPMENT BANK OF THEPHILIPPINES as creditor of the insured Dr. Wilfredo Leuterio, the amount of EIGHTY SIX

THOUSAND TWO HUNDRED PESOS (P86,200.00); dismissing the claims for damages,

attorneys fees and litigation expenses in the complaint and counterclaim, with costs against the

defendant and dismissing the complaint in respect to the plaintiffs, other than the widow-beneficiary, for lack of cause of action.iii[3]

The facts, as found by the Court of Appeals, are as follows:

A contract of group life insurance was executed between petitioner Great Pacific Life Assurance

Corporation (hereinafter Grepalife) and Development Bank of the Philippines (hereinafter DBP).Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP.

On November 11, 1983, Dr. Wilfredo Leuterio, a physician and a housing debtor of DBP appliedfor membership in the group life insurance plan. In an application form, Dr. Leuterio answered

questions concerning his health condition as follows:

7. Have you ever had, or consulted, a physician for a heart condition, high blood pressure,

cancer, diabetes, lung, kidney or stomach disorder or any other physical impairment?

Answer: No. If so give details ___________.

8. Are you now, to the best of your knowledge, in good health?

Answer: [ x ] Yes [ ] No.iv[4]

On November 15, 1983, Grepalife issued Certificate No. B-18558, as insurance coverage of Dr.Leuterio, to the extent of his DBP mortgage indebtedness amounting to eighty-six thousand, two

hundred (P86,200.00) pesos.

On August 6, 1984, Dr. Leuterio died due to massive cerebral hemorrhage. Consequently,DBP submitted a death claim to Grepalife. Grepalife denied the claim alleging that Dr. Leuterio

was not physically healthy when he applied for an insurance coverage on November 15, 1983.

Grepalife insisted 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.


17/47

On October 20, 1986, the widow of the late Dr. Leuterio, respondent Medarda V. Leuterio, filed

a complaint with the Regional Trial Court of Misamis Oriental, Branch 18, against Grepalife for

Specific Performance with Damages.v[5]During the trial, Dr. Hernando Mejia, who issued thedeath certificate, was called to testify. Dr. Mejias findings, based partly from the information

given by the respondent widow, stated that Dr. Leuterio complained of headaches presumably

due to high blood pressure. The inference was not conclusive because Dr. Leuterio was notautopsied, hence, other causes were not ruled out.

On February 22, 1988, the trial court rendered a decision in favor of respondent widow andagainst Grepalife. On May 17, 1993, the Court of Appeals sustained the trial courts decision.

Hence, the present petition. Petitioners interposed the following assigned errors:

"1. THE LOWER COURT ERRED IN HOLDING DEFENDANT-APPELLANT LIABLE

TO THE DEVELOPMENT BANK OF THE PHILIPPINES (DBP) WHICH IS NOT A PARTY

TO THE CASE FOR PAYMENT OF THE PROCEEDS OF A MORTGAGE REDEMPTION

INSURANCE ON THE LIFE OF PLAINTIFFS HUSBAND WILFREDO LEUTERIO ONE

OF ITS LOAN BORROWERS, INSTEAD OF DISMISSING THE CASE AGAINSTDEFENDANT-APPELLANT [Petitioner Grepalife] FOR LACK OF CAUSE OF ACTION.

2. THE LOWER COURT ERRED IN NOT DISMISSING THE CASE FOR WANT OF

JURISDICTION OVER THE SUBJECT OR NATURE OF THE ACTION AND OVER THE

PERSON OF THE DEFENDANT.

3. THE LOWER COURT ERRED IN ORDERING DEFENDANT-APPELLANT TO PAY

TO DBP THE AMOUNT OF P86,200.00 IN THE ABSENCE OF ANY EVIDENCE TO SHOWHOW MUCH WAS THE ACTUAL AMOUNT PAYABLE TO DBP IN ACCORDANCE

WITH ITS GROUP INSURANCE CONTRACT WITH DEFENDANT-APPELLANT.

4. THE LOWER COURT ERRED IN - HOLDING THAT THERE WAS NO

CONCEALMENT OF MATERIAL INFORMATION ON THE PART OF WILFREDO

LEUTERIO IN HIS APPLICATION FOR MEMBERSHIP IN THE GROUP LIFEINSURANCE PLAN BETWEEN DEFENDANT-APPELLANT OF THE INSURANCE

CLAIM ARISING FROM THE DEATH OF WILFREDO LEUTERIO.vi[6]

Synthesized below are the assigned errors for our resolution:

1. Whether the Court of Appeals erred in holding petitioner liable to DBP as beneficiary in agroup life insurance contract from a complaint filed by the widow of the decedent/mortgagor?

2. Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed that he hadhypertension, which would vitiate the insurance contract?

3. Whether the Court of Appeals erred in holding Grepalife liable in the amount of eighty six

thousand, two hundred (P86,200.00) pesos without proof of the actual outstanding mortgage

payable by the mortgagor to DBP.


18/47

Petitioner alleges that the complaint was instituted by the widow of Dr. Leuterio, not the real

party in interest, hence the trial court acquired no jurisdiction over the case. It argues that when

the Court of Appeals affirmed the trial courts judgment, Grepalife was held liable to pay theproceeds of insurance contract in favor of DBP, the indispensable party who was not joined in

the suit.

To resolve the issue, we must consider the insurable interest in mortgaged properties and the

parties to this type of contract. The rationale of a group insurance policy of mortgagors,

otherwise known as the mortgage redemption insurance, is a device for the protection of boththe 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.vii[7]In asimilar 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]Consequently, where the mortgagor pays the insurance

premium under the group insurance policy, making the loss payable to the mortgagee, theinsurance is on the mortgagors interest, and the mortgagor continues to be a party tothe

contract. In this type of policy insurance, the mortgagee is simply an appointee of the insurancefund, such loss-payable clause does not make the mortgagee a party to the contract.viii[9]

Section 8 of the Insurance Code provides

Unless the policy provides, where a mortgagor of property effects insurance in his own name

providing that the loss shall be payable to the mortgagee, or assigns a policy of insurance to a

mortgagee, the insurance is deemed to be upon the interest of the mortgagor, who does not ceaseto be a party to the original contract, and any act of his, prior to the loss, which would otherwise

avoid the insurance, will have the same effect, although the property is in the hands of themortgagee, but any act which, under the contract of insurance, is to be performed by themortgagor, may be performed by the mortgagee therein named, with the same effect as if it had

been performed by the mortgagor.

The insured private respondent did not cede to the mortgagee all his rights or interests in the

insurance, the policy stating that: In the event of the debtors death before his indebtedness

with the Creditor [DBP] shall have been fully paid, an amount to pay the outstandingindebtedness shall first be paid to the creditor and the balance of sum assured, if there is any,

shall then be paid to the beneficiary/ies designated by the debtor.ix[10]When DBP submitted

the insurance claim against petitioner, the latter denied payment thereof, interposing the defense

of concealment committed by the insured. Thereafter, DBP collected the debt from themortgagor and took the necessary action of foreclosure on the residential lot of private

respondent.x[11]In Gonzales La O vs. Yek Tong Lin Fire & Marine Ins. Co.xi[12]we held:

Insured, being the person withwhom 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 named or unnamed, and although it isexpressly made payable to another as his interest may appear or otherwise. * * * Although a


19/47

policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to

him, yet the mortgagor may sue thereon in his own name, especially where the mortgagees

interest is less than the full amount recoverable under the policy, * * *.

And in volume 33, page 82, of the same work, we read the following:

Insured may be regarded as the real party in interest, although he has assigned thepolicy for the

purpose of collection, or has assigned as collateral security any judgment he may obtain.xii[13]

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 whateverthe insured might have recovered,xiii[14]the widow of the decedent Dr. Leuterio may file the

suit against the insurer, Grepalife.

The second assigned error refers to an alleged concealment that the petitioner interposed as itsdefense to annul the insurance contract. Petitioner contends that Dr. Leuterio failed to disclose

that he had hypertension, which might have caused his death. Concealment exists where theassured had knowledge of a fact material to the risk, and honesty, good faith, and fair dealingrequires that he should communicate it to the assured, but he designedly and intentionally

withholds the same.xiv[15]

Petitioner merely relied on the testimony of the attending physician, Dr. Hernando Mejia, as

supported by the information given by the widow of the decedent. Grepalife asserts that Dr.

Mejias technical diagnosis of the cause of death of Dr. Leuterio was a duly documented hospitalrecord, and that the widows declaration that her husband had possible hypertension several

years ago should not be considered as hearsay, but as part of res gestae.

On the contrary the medical findings were not conclusive because Dr. Mejia did not conduct anautopsy on the body of the decedent. As the attending physician, Dr. Mejia stated that he had no

knowledge of Dr. Leuterios any previous hospital confinement.xv[16]Dr. Leuterios deathcertificate stated that hypertension was only the possible cause of death. The private

respondents statement, as to the medical history of her husband, was due to her unreliable

recollection of events. Hence, the statement of the physician was properly considered by the trial

court as hearsay.

The question of whether there was concealment was aptly answered by the appellate court, thus:

The insured, Dr. Leuterio, had answered in his insurance application that he was in good health

and that he had not consulted a doctor or any of the enumerated ailments, includinghypertension; when he died the attending physician had certified in the death certificate that theformer died of cerebral hemorrhage, probably secondary to hypertension. From this report, the

appellant insurance company refused to pay the insurance claim. Appellant alleged that the

insured had concealed the fact that he had hypertension.

Contrary to appellants allegations, there was no sufficient proof that the insured had suffered

from hypertension. Aside from the statement of the insureds widow who was not even sure if


20/47

the medicines taken by Dr. Leuterio were for hypertension, the appellant had not proven nor

produced any witness who could attest to Dr. Leuterios medical history...

x x x

Appellant insurance company had failed to establish that there was concealment made by theinsured, hence, it cannot refuse payment of the claim.xvi[17]

The fraudulent intent on the part of the insured must be established to entitle the insurer to

rescind the contract.xvii[18]Misrepresentation as a defense of the insurer to avoid liability is an

affirmative defense and the duty to establish such defense by satisfactory and convincingevidence rests upon the insurer.xviii[19]In the case at bar, the petitioner failed to clearly and

satisfactorily establish its defense, and is therefore liable to pay the proceeds of the insurance.

And that brings us to the last point in the review of the case at bar. Petitioner claims that therewas no evidence as to the amount of Dr. Leuterios outstanding indebtedness to DBP at the time

of the mortgagors death. Hence, for private respondents failure toestablish the same, theaction for specific performance should be dismissed. Petitioners claim is without merit. A lifeinsurance policy is a valued policy.xix[20]Unless the interest of a person insured is susceptible

of exact pecuniary measurement, the measure of indemnity under a policy of insurance upon life

or health is the sum fixed in the policy.xx[21]The mortgagor paid the premium according to thecoverage of his insurance, which states that:

The policy states that upon receipt of due proof of the Debtors death during the terms of thisinsurance, a death benefit in the amount of P86,200.00 shall be paid.

In the event of the debtors death before his indebtedness with the creditor shall have been fully

paid, an amount to pay the outstanding indebtedness shall first be paid to the Creditor and thebalance of the Sum Assured, if there is any shall then be paid to the beneficiary/ies designated by

the debtor.xxi[22](Emphasis omitted)

However, we noted that the Court of Appeals decision was promulgatedon May 17, 1993. In

private respondents memorandum, she states that DBP foreclosed in 1995 their residential lot, insatisfaction of mortgagors outstanding loan. Considering this supervening event, the insurance

proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. Equity

dictates that DBP should not unjustly enrich itself at the expense of another (Nemo cum alterius

detrimenio protest). Hence, it cannot collect the insurance proceeds, after it already foreclosedon the mortgage. The proceeds now rightly belong to Dr. Leuterios heirs represented by his

widow, herein private respondent Medarda Leuterio.

WHEREFORE, the petition is hereby DENIED. The Decision and Resolution of the Court of

Appeals in CA-G.R. CV 18341 is AFFIRMED with MODIFICATION that the petitioner is

ORDERED to pay the insurance proceeds amounting to Eighty-six thousand, two hundred(P86,200.00) pesos to the heirs of the insured, Dr. Wilfredo Leuterio (deceased), upon

presentation of proof of prior settlement of mortgagors indebtedness to Development Bank of

the Philippines. Costs against petitioner.


21/47


22/47

The insured, in his application for insurance, particularly in his declarations to the examining

physician, stated the following in answering the questions propounded to him:

14. Have you ever had any of the following diseases or symptoms? Each question must

be read and answered "Yes" or "No".

x x x x x x x x x

Gastritis, Ulcer of the Stomach or any disease of that organ? No.

Vertigo, Dizziness, Fainting-spells or Unconscious? No.

Cancer, Tumors or Ulcers of any kind? No.

15. Have you ever consulted any physician not included in any of the above answers?

Give names and address or physicians list ailments or accidents and date. No.

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

29, 1950 having stayed there up to February 11, 1950. Upon entering the hospital, he complainedof dizziness, anemia, abdominal pains and tarry stools, and in the evening of his admission he

had several abdominal pains and his discharges were with black tarry stools and felt dizzy and

weak. The history of his illness shows that the same "started a year ago as frequent dizziness."

An X-Ray picture of his stomach was taken and the diagnosis made of him by his doctorsshowed that his illness was "peptic ulcer, bleeding."

It should be noted that the insured's confinement in the Chinese General Hospital took placefrom January 29, 1950 to February 11, 1950, whereas his application for insurance wherein he

stated his answer to the questions propounded to him by the examining physician of defendantwas submitted to defendant on September 5, 1950. It is apparent that when the insured gave hisanswers regarding his previous ailment, particularly with regard to "Gastritis, Ulcer of the

Stomach or any disease of that organ" and "Vertigo, Dizziness, Fainting-spells or

Unconsciousness", he concealed the ailment of which he was treated in the Chinese General,

Hospital which precisely has direct connection with the subject of the questions propounded. Thenegative answers given by the insured regarding his previous ailment, or his concealment of the

fact that he was hospitalized and treated for sometime of peptic ulcer and had suffered from

"dizziness, anemia, abdominal pains and tarry stools", deprived defendant of the opportunity tomake 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,

considering the previous illness of the insured as disclosed by the record of the Chinese GeneralHospital, defendant would probably had never consented to the issuance of the policy inquestion. In fact, according to the death certificate, the insured died of "infiltrating medullary

carcinoma, Grade 4, advanced cardiac and of lesser curvature, stomach metastases spleen",

which may have direct connection with his previous illness.

Our Insurance law provides that " A neglect to communicate that which a party knows and ought

to communicate, is called concealment" (Section 25, Act No. 2427). Whether intentional or


23/47

unintentional, the concealment entitles the insurer to rescind the contract of insurance (Section

26). Our law even 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 ofascertaining (Section 27), and 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 (Section 30).

In the case ofArgente vs. West Coast Life Insurance Co., 51 Phil., 725 this Court said:

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." Appellant argues that the concealment wasimmaterial and insufficient to avoid the policy. We cannot agree. 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 apparently set forth therein was never legally existent. It can fairly beassumed that had the true facts been disclosed by the assured, the insurance would never

have been granted.

Upon the foregoing reasons, we are persuaded to conclude that respondent court did err in

declaring the policy ineffective on the ground of concealment and in relieving appellee fromliability thereunder.

Wherefore, the decision appealed from is affirmed, with costs against petitioner-appellant.

G.R. No. L-24899 March 19, 1928

BERNARDO ARGENTE,plaintiff-appellant,

vs.

WEST COAST LIFE INSURANCE CO.,defendant-appellee.

Abad Santos, Camus, Delgado & Recto for appellant.Gibbs & McDonough and Roman Ozaeta for appellee.

MALCOLM, J.:

This is an action upon a joint life insurance policy for P15,000 issued by the defendant, the West

Coast Life Insurance Co., on May 15, 1925, in favor of the plaintiff, Bernardo Argente, and hiswife, Vicenta de Ocampo, the latter having died on November 18, 1925. Fraud in obtaining the

policy was pleaded by way of special defense. On the issue thus suggested, the court adopted the

theory of the defendant, and held the insurance policy null and void, with the result that thecomplaint was dismissed, with costs.

On February 9, 1925, Bernardo Argente signed an application for joint insurance with his wife inthe sum of P2,000. The wife, Vicenta de Ocampo, signed a like application for the same policy.


24/47

Both applications, with the exception of the names and the signatures of the applicants, were

written by Jose Geronimo del Rosario, an agent for the West Coast Life Insurance Co. But all the

information contained in the applications was furnished the agent by Bernardo Argente.

Pursuant to his application, Bernardo Argente was examined by Dr. Cesareo Sta. Ana, a medical

examiner for the West Coast Life Insurance Co., on February 10, 1925, in the office of theCustoms House. The result of such examination was recorded in the Medical Examiner's Report,

and with the exception of the signature of Bernardo Argente, was in the hand-writing of Doctor

Sta. Ana. But the information or answers to the questions contained on the face of the MedicalExaminer's Report were furnished the doctor by the applicant, Bernardo Argente.

Pursuant to her application, Vicenta de Ocampo, wife of the plaintiff, was examined by Dr.Cesareo Sta. Ana on February 10, 1925, at her residence in Manila. The result of the medical

examination, including among other things, the answers given by Vicenta de Ocampo to the

questions propounded to her by the physician, appears in the Medical Examiner's Report.

On May 9, 1925, Bernardo Argente and his wife submitted to the West Coast Life Insurance Co.an amended application for insurance, increasing the amount thereof to P15,000, and asked that

the policy be dated May 15, 1925. The amended application was accompanied by the documentsentitled "Short Form Medical Report." In both of these documents appear certain questions and

answers.

A temporary policy for P15,000 was issued to Bernardo Argente and his wife as of May 15, but

it was not delivered to Bernardo Argente until July 2, 1925, when the first quarterly premium on

the policy was paid. In view of the fact that more than thirty days had elapsed since theapplicants were examined by the company's physician, each of them was required to file a

certificate of health before the policy was delivered to them.

On November 18, 1925, Vicenta de Ocampo died of cerebral apoplexy. Thereafter Bernardo

Argente presented a claim in due form to the West Coast Life Insurance Co. for the payment of

the sum of P15,000 the amount of the joint life Insurance policy. Following investigationconducted by the Manager of the Manila office of the insurance company, it was apparently

disclosed that the answers given by the insured in their medical examinations with regard to their

health and previous illness and medical attendance were untrue. For that reason, the West CoastLife Insurance Co. refused to pay the claim of Bernardo Argente, and on May 25, 1926, wrote

him to the effect that the claim was rejected because the insurance was obtained through fraud

and misrepresentation.

It is admitted that it appears in the Medical Examiner's Report that Bernardo Argente, in

response to the question asked by the medical examiner, "Have you ever consulted a physician

for, or have you ever suffered from any ailment or disease of, the brain or nervous system?"answered "No." To the question, "Have you consulted a physician for any ailment or disease not

included in your above answer," answered "Yes. Nature of Ailment, Disease or Injury. Scabies,

Number of attacks 1, Date 1911. Duration 1 month, Severity Fair, results and, if within fiveyears, name and address of every physician consulted. Dr. P. Guazon. Cured. Dr. Guazon is dead

now." And to the question, "What physician or physicians, if any, not named above, have you


25/47

consulted or been treated by, within the last five years and for what illness or ailment? (If none,

so state)" answered "No." It is, however, not disputed that on January 10, 11, and 13, 1923,

Bernardo Argente was confined in the Philippine General Hospital where he was treated by Dr.Agerico B. M. Sison for cerebral congestion and Bell's Palsy.

It is further admitted that it appears in the Medical Examiner's Report that Vicenta de Ocampo,in response to the question asked by the medical examiner, "How frequently, if at all, and in

what quantity do you use beer, wine, spirits or other intoxicants?" answered "Beer only in small

quantities occasionally." To the question, "Have you ever consulted a physician for or have youever suffered from any ailment or disease of the brain or nervous system?" answered "No." To

the question, "What physician or physicians, if any, not named above, have you consulted or

been treated by, within the last five years and for what illness or ailment? (If none, so state)"

answered "None." And to the question, "Are you in good health as far as you know and believe?"answered "Yes." It is, however, not disputed that Vicenta de Ocampo was taken by a patrolman,

at the request of her husband, Bernardo Argente, on May 19, 1924, to the Meisic police station,

and from there was transferred to the San Lazaro Hospital. In San Lazaro Hospital, her case was

diagnosed by the admitting physician as "alcoholism," but later Doctor Domingo made adiagnosis of probable "manic-depressive psychosis," and still, later in Mary Chiles Hospital,

made a final diagnosis of "phycho-neurosis."

The plaintiff, Bernardo Argente, while readily conceding most of the facts herein narrated, yet

alleges that both he and his wife revealed to the company's physician. Doctor Sta. Ana, all the

facts concerning the previous illnesses and medical attendance, but that Doctor Sta. Ana,presumably acting in collusion, with the insurance agent, Jose Geronimo del Rosario, failed to

record them in the medical reports. The evidence on these points consists of the testimony of the

plaintiff and his subordinate clerk, Apolonio Espiritu, on the one hand, and of the testimony ofDoctor Sta. Ana and Jose Geronimo del Rosario on the other. On the question of fact thus raised,

the trial judge found with the insurance company. In so doing, we believe that His Honor gave

proper inclination to the weight of the proof. There appears no motive whatever on the part of

Doctor Sta. Ana to falsify the Medical Examiner's Reports and thereby not only jeopardize hiscareer as a physician, but also gravely implicate himself criminally.

What has heretofore been stated in this decision is gleaned to a great extent the carefully

prepared decision of the trial judge, the Honorable George R. Harvey. The court found from the

evidence that the representations made by Bernardo Argente and his wife in their applications to

the defendant for life insurance were false with respect to their estate of health during the periodof five years preceding the date of such applications, and that they knew the representations

made by them in their applications were false. The court further found from the evidence that the

answers given by Bernardo Argente and his wife at the time of the medical examination by

Doctor Sta. Ana were false with respect to the condition of their health at that time and for aperiod of several years prior thereto. Based on these findings which must here be accepted since

the stenographic transcript is incomplete, the question arises as to the estate of the law in relation

thereto.

One ground for the rescission of a contract of insurance under the Insurance Act is "a

concealment," which in section 25 is defined as "A neglect to communicate that which a party


26/47

knows and ought to communicate." Appellant argues that the alleged concealment was

immaterial and insufficient to avoid the policy. We cannot agree. In an action on a life insurance

policy where the evidence conclusively shows that the answers to questions concerning diseaseswere untrue, the truth of falsity of the answers become the determining factor. In the policy was

procured by fraudulent representations, the contract of insurance apparently set forth therein was

never legally existent. It can fairly be assumed that had the true facts been disclosed by theassured, the insurance would never have been granted.

In Joyce, The Law of Insurance, second edition, volume 3, Chapter LV, is found the following:

Concealment exists where the assured has knowledge of a fact material to the risk, and

honesty, good faith, and fair dealing requires that he should communicate it to theassured, but he designated and intentionally with holds the same.

Another rule is that if the assured undertakes to state all the circumstances affecting therisk, a full and fair statement of all is required.

It is also held that the concealment must, in the absence of inquiries, be not only material,but fraudulent, or the fact must have been intentionally withheld; so it is held under

English law that if no inquiries are made and no fraud or design to conceal enters into the

concealment the contract is not avoided. And it is determined that even though silencemay constitute misrepresentation or concealment it is not itself necessarily so as it is aquestion of fact. Nor is there a concealment justifying a forfeiture where the fact of

insanity is not disclosed no questions being asked concerning the same. . . .

But it would seem that if a material fact is actually known to the assured, its concealment

must of itself necessarily be a fraud, and if the fact is one which the assured ought to

know, or is presumed to know, the presumption of knowledge ought to place the assuredin the same position as in the former case with relation to material facts; and if the jury in

such cases find the fact material, and one tending to increase the risk, it is difficult to see

how the inference of a fraudulent intent or intentional concealment can be avoided. Andit is declared that if a material fact concealed by assured it is equivalent to a false

representation that it does not exist and that the essentials are the truth of the

representations whether they were intended to mislead and did insurer accept them as trueand act upon them to his prejudice. So it is decided that under a stipulation voiding the

policy for concealment or misrepresentation of any material fact or if his interest is not

truly stated or is either than the sole and unconditional ownership the facts are

unimportant that insured did not intend to deceive or withhold information as toencumbrances even though no questions were asked. And if insured while being

examined for life insurance and knowing that she had heart disease, falsely stated that she

was in good health, and though she could not read the application, it was explained to her

and the questions asked through an interpreter, and the application like the policycontained and provision that no liability should be incurred unless the policy was

delivered while the insured was in good health, the court properly directed a verdict for

the insurer, though a witness who was present at the examination testified that the insuredwas not asked whether she had heart disease.


27/47

x x x x x x x x x

The basis of the rule vitiating the contract in case of concealment is that it misleads ordeceives the insurer into accepting the risk, or accepting it at the rate of premium agreed

upon. The insurer, relying upon the belief that the assured will disclose every material

within his actual or presumed knowledge, is misled into a belief that the circumstancewithheld does not exist, and he is thereby induced to estimate the risk upon a false basis

that it does not exist. The principal question, therefore, must be, Was the assurer misled

or deceived into entering a contract obligation or in fixing the premium of insurance by awithholding of material information of facts within the assured's knowledge or presumed

knowledge?

It therefore follows that the assurer in assuming a risk is entitled to know every material

fact of which the assured has exclusive or peculiar knowledge, as well as all material

facts which directly tend to increase the hazard or risk which are known by the assured,

or which ought to be or are presumed to be known by him. And a concealment of such

facts vitiates the policy. "It does not seem to be necessary . . . that the . . . suppression ofthe truth should have been willful." If it were but an inadvertent omission, yet if it were

material to the risk and such as the plaintiff should have known to be so, it would renderthe policy void. But it is held that if untrue or false answers are given in response to

inquiries and they relate to material facts the policy is avoided without regard to the

knowledge or fraud of assured, although under the statute statements are representations

which must be fraudulent to avoid the policy. So under certain codes the importantinquiries are whether the concealment was willful and related to a matter material to the

risk.

x x x x x x x x x

If the assured has exclusive knowledge of material facts, he should fully and fairlydisclose the same, whether he believes them material or not. But notwithstanding this

general rule it will not infrequently happen, especially in life risks, that the assured may

have a knowledge actual or presumed of material facts, and yet entertain an honest beliefthat they are not material. . . . The determination of the point whether there has or has not

been a material concealment must rest largely in all cases upon the form of the questions

propounded and the exact terms of the contract. Thus, where in addition to specificallynamed diseases the insured was asked whether he had any sickness within ten years, to

which he answered "No," and it was proven that within that period he had a slight of

pharyngitis, it was held a question properly for the jury whether such an inflammation of

the throat was a "sickness" within the intent of the inquiry, and the court remarked on theappeal decision that if it could be held as a matter of law that the policy was thereby

avoided, then it was a mere device on the part of insurance companies to obtain money

without rendering themselves liable under the policy. . . .

. . . The question should be left to the jury whether the assured truly represented the state

of his health so as not mislead or deceive the insurer; and if he did not deal a good faithwith insurer in that matter, that the inquiry should be made, Did he know the state of his


28/47

health so as to be able to furnish a proper answer to such questions as are propounded? A

Massachusetts case, if construed as it is frequently cited, would be opposed to the above

conclusion; but, on the contrary, it sustains it, for the reason that symptoms ofconsumption had so far developed themselves within a few months prior to effecting the

insurance as to induce a reasonable belief that the applicant had that fatal disease, and we

should further construe this case as establishing the rule that such a matter cannot restalone upon the assured's belief irrespective of what is a reasonable belief, but that it oughtto be judged by the criterion whether the belief is one fairly warranted by the

circumstances. A case in Indiana, however, holds that if the assured has some affection or

ailment of one or more of the organs inquired about so well-defined and marked as tomaterially derange for a time the functions of such organ, as in the case of Bright's

disease, the policy will be avoided by a nondisclosure, irrespective of the fact whether the

assured knew of such ailment or not. . . .

Lastly, appellant contends that even if the insurance company had a right to rescind the contract,

such right cannot now be enforced in view of the provisions of section 47 of the Insurance Act

providing "Whenever a right to rescind a contract of insurance is given to their insurer byprovision of this chapter, such right must be exercised previous to the commencement of an

action on the contract." This section was derived from section 2583 of the California Civil Code,but in contrast thereto, makes use of the imperative "must" instead of the permissive "may."Nevertheless, there are two answers to the problem as propounded. The first is that the California

law as construed by the code examiners, at whose recommendation it was adopted, conceded that

"A failure to exercise the right (of rescission), cannot, of course, prejudice any defense to theaction which the concealment may furnish." (Codes of California annotated; Tan Chay Heng vs.

West Coast Life Insurance Company [1927], p. 80, ante.) The second answer is that the

insurance company more than one month previous to the commencement of the present action

wrote the plaintiff and informed him that the insurance contract was void because it had beenprocured through fraudulent representations, and offered to refund to the plaintiff the premium

which the latter had paid upon the return of the policy for cancellation. As held in California as

to a fire insurance policy, where any of the material representations are false, the insurer's tender

of the premium and notice that the policy is canceled, before the commencement of suit thereon,operate to rescind the contract of insurance. (Rankin vs.Amazon Insurance Co. [1891], 89 Cal.,

203.)

We are content to rest our judgment on the findings of the trial court, and on the law governing

those facts, with the result that the various assignments of error are found to be withoutpersuasive merit.

Judgment affirmed, with the costs of this instance against the appellant.

G.R. No. L-16163 February 28, 1963

IGNACIO SATURNINO, in his own behalf and as the JUDICIAL GUARDIAN OFCARLOS SATURNINO, minor,plaintiffs-appellants,

vs.

THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY,defendant-appellee.


29/47

Eleazaro A. Samson for plaintiffs-appellants.

Abello & Macias for defendant-appellee.

MAKALINTAL, J.:

Plaintiffs, now appellants, filed this action in the Court of First Instance of Manila to recover thesum of P5,000.00, corresponding to the face value of an insurance policy issued by defendant on

the life of Estefania A. Saturnino, and the sum of P1,500.00 as attorney's fees. Defendant, now

appellee, set up special defenses in its answer, with a counterclaim for damages allegedlysustained as a result of the unwarranted presentation of this case. Both the complaint and the

counterclaim were dismissed by the trial court; but appellants were declared entitled to the return

of the premium already paid; plus interest at 6% up to January 8, 1959, when a check for thecorresponding amountP359.65was sent to them by appellee.

The policy sued upon is one for 20-year endowment non-medical insurance. This kind of policydispenses with the medical examination of the applicant usually required in ordinary life policies.

However, detailed information is called for in the application concerning the applicant's healthand medical history. The written application in this case was submitted by Saturnino to appellee

on November 16, 1957, witnessed by appellee's agent Edward A. Santos. The policy was issuedon the same day, upon payment of the first year's premium of P339.25. On September 19, 1958

Saturnino died of pneumonia, secondary to influenza. Appellants here, who are her surviving

husband and minor child, respectively, demanded payment of the face value of the policy. Theclaim was rejected and this suit was subsequently instituted.

It appears that two months prior to the issuance of the policy or on September 9, 1957, Saturninowas operated on for cancer, involving complete removal of the right breast, including the

pectoral muscles and the glands found in the right armpit. She stayed in the hospital for a period

of eight days, after which she was discharged, although according to the surgeon who operatedon her she could not be considered definitely cured, her ailment being of the malignant type.

Notwithstanding the fact of her operation Estefania A. Saturnino did not make a disclosurethereof in her application for insurance. On the contrary, she stated therein that she did not have,

nor had she ever had, among other ailments listed in the application, cancer or other tumors; that

she had not consulted any physician, undergone any operation or suffered any injury within thepreceding five years; and that she had never been treated for nor did she ever have any illness or

disease peculiar to her sex, particularly of the breast, ovaries, uterus, and menstrual disorders.

The application also recites that the foregoing declarations constituted "a further basis for the

issuance of the policy."

The question at issue is whether or not the insured made such false representations of material

facts as to avoid the policy. There can be no dispute that the information given by her in herapplication for insurance was false, namely, that she had never had cancer or tumors, or

consulted any physician or undergone any operation within the preceding period of five years.

Are the facts then falsely represented material? The Insurance Law (Section 30) provides that"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


30/47

of the proposed contract, or in making his inquiries." It seems to be the contention of appellants

that the facts subject of the representation were not material in view of the "non-medical" nature

of the insurance applied for, which does away with the usual requirement of medicalexamination before the policy is issued. The contention is without merit. If anything, the waiver

of medical examination renders even more material the information required of the applicant

concerning previous condition of health and diseases suffered, for such information necessarilyconstitutes an important factor which the insurer takes into consideration in deciding whether toissue the policy or not. It is logical to assume that if appellee had been properly apprised of the

insured's medical history she would at least have been made to undergo medical examination in

order to determine her insurability.

Appellants argue that due information concerning the insured's previous illness and operation

had been given to appellees agent Edward A. Santos, who filled the application form after it wassigned in blank by Estefania A. Saturnino. This was denied by Santos in his testimony, and the

trial court found such testimony to be true. This is a finding of fact which is binding upon us, this

appeal having been taken upon questions of law alone. We do not deem it necessary, therefore,

to consider appellee's additional argument, which was upheld by the trial court, that in signingthe application form in blank and leaving it to Edward A. Santos to fill (assuming that to be the

truth) the insured in effect made Santos her agent for that purpose and consequently wasresponsible for the errors in the entries made by him in that capacity.

In the application for insurance signed by the insured in this case, she agreed to submit to a

medical examination by a duly appointed examiner of appellee if in

insurance batch 3

Documents