Facts:

This case, Bernardo Argente v. West Coast Life Insurance Co., was decided by the Supreme Court of the Philippines on March 19, 1928, under G.R. No. 28499. The action was initiated by Bernardo Argente, the plaintiff and appellant, against West Coast Life Insurance Co., the defendant and appellee. The dispute arose over a joint life insurance policy for ₱15,000 issued on May 15, 1925, in favor of Bernardo Argente and his wife, Vicenta de Ocampo. Vicenta passed away on November 18, 1925, after which Argente filed a claim for the insurance payout.

The defendant contested the legitimacy of the claim, alleging that the policy was procured through fraud. Bernardo Argente had submitted an application for a joint insurance policy, and both he and Vicenta underwent medical examinations, which yielded crucial information regarding their health. Notably, Argente had previously been hospitalized for conditions related to the brain, which he did not disclose in his application answers. Simil

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Facts:

Parties and Policy Issuance

• Bernardo Argente, the plaintiff and appellant, applied for a joint life insurance policy on behalf of himself and his wife, Vicenta de Ocampo, with West Coast Life Insurance Co. as the defendant and appellee.
• The initial application for a lower sum (P2,000) was signed by both Bernardo Argente and his wife on February 9, 1925, with the information provided entirely by Bernardo Argente, though the application form was prepared by the insurance agent, Jose Geronimo del Rosario.
• A joint amended application was later made on May 9, 1925, to increase the insured amount to P15,000 and to request the policy be dated May 15, 1925, accompanied by a "Short Form Medical Report."
• A temporary policy for the increased sum was issued on May 15, 1925, but actual delivery of the policy waited until July 2, 1925, upon payment of the first quarterly premium and after submission of certificates of health since more than thirty days had elapsed since the medical examinations.

Medical Examinations and Reports

• Bernardo Argente underwent a medical examination by Dr. Cesareo Sta. Ana on February 10, 1925, at the Customs House office.
• The examination produced a Medical Examiner’s Report, largely handwritten by Dr. Sta. Ana, but with responses provided by Bernardo Argente.
• Vicenta de Ocampo was also examined by Dr. Sta. Ana on the same day at her residence in Manila.
• Her corresponding report similarly contained information provided during the examination, recording her responses regarding her health and lifestyle.
• The applications and medical reports contained specific questions regarding previous illnesses, consultations, and overall health that were answered by the applicants, with particular focus on brain, nervous system ailments, and other health conditions.

Representation of Health and Previous Medical History

• The medical questionnaires required disclosure of prior health conditions and treatments.
• Bernardo Argente’s responses on his Medical Examiner’s Report were scrutinized:
• He denied any consultation or treatment in relation to brain or nervous system ailments, except for a brief mention of scabies in 1911.
• However, evidence showed that he had been confined in the Philippine General Hospital on January 10, 11, and 13, 1923, for treatment of cerebral congestion and Bell’s Palsy.
• Vicenta de Ocampo’s responses indicated occasional use of beer, denied extensive consultation for ailments concerning the brain or nervous system, and asserted being in good health.
• Records reveal, however, that she was taken to the Meisic police station and then transferred to San Lazaro Hospital on May 19, 1924, where her condition was variously diagnosed as “alcoholism,” “manic-depressive psychosis,” and finally “psycho-neurosis.”

Allegations of Fraud and the Discovery of Concealment

• After Vicenta de Ocampo’s death on November 18, 1925, Bernardo Argente filed a claim for the life insurance benefits.
• The West Coast Life Insurance Co. initiated an investigation that disclosed discrepancies:
• It was found that the representations made in the applications and during the medical examinations were false concerning the true state of the applicants’ health.
• The insurer alleged that both applicants had intentionally withheld material information about their health history, which was crucial to assessing the risk.
• The defendant based its action for rescission on the theory of concealment, as many of the answers given were later proved to contradict the documented history, exposing the insurance contract as procured by fraud.

Procedural History and Evidence Presented

• The insurance company, upon discovering the falsehoods in the applicants’ statements regarding health conditions, rejected the claim for P15,000 on May 25, 1926, citing fraud and misrepresentation.
• The key evidence included:
• Testimonies from Bernardo Argente and his subordinate clerk, Apolonio Espiritu, supporting the claim that all pertinent health information had been disclosed.
• Testimonies from Dr. Sta. Ana and the agent, Jose Geronimo del Rosario, corroborating that the responses recorded in the Medical Examiner’s Report were provided by the insured, and indicating no ulterior motive by the physician to misrepresent the facts.
• The trial judge, Honorable George R. Harvey, found that the representations in the insurance applications were false with respect to the applicants’ health conditions during the preceding five years, and that both knew of the falsity of their statements, thus justifying the nullification of the policy.

Notification and Action on Policy Rescission

• The defendant, prior to litigation, communicated to Bernardo Argente (more than one month before the commencement of the action) that the policy was null and void because it had been procured through fraudulent misrepresentation.
• The insurer had even offered to refund the premium paid upon removal of the policy as a part of the policy’s cancellation procedure.

Issue:

Whether the life insurance policy was procured through fraud by Bernardo Argente and his wife, thus rendering the contract void due to misrepresentation and concealment of material facts.

• The inquiry centered on whether the false responses about their prior medical history, particularly regarding conditions such as cerebral congestion, Bell's Palsy, and other ailments, materially affected the risk assumed by the insurer.
• The determination of “materiality” of the false statements and omissions as a ground for rescinding the policy.

Whether the failure of Bernardo Argente and his wife to truthfully disclose significant medical history, including their previous hospitalizations and treatments, constituted a concealment that was sufficient in itself to void the policy under the Insurance Act.

• The issue focused on whether the insurer was misled into accepting the risk based on incomplete and false information.
• The analysis included whether the concealment was fraudulent or merely inadvertent, and its consequent impact on the validity of the contract.

The applicability of Section 47 of the Insurance Act regarding the rescission of a contract for concealment or misrepresentation, particularly in view of the insurer’s prior communication and tender of premiums.

• Whether the insurer’s notice of rescission and offer to refund the premium before the commencement of the action effectively preserved its right to rescind the contract.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)