G.R. No. L-16163 - Saturnino vs. Philippine American Life Insurance Co.

Plaintiffs-appellants, Ignacio Saturnino and others, filed an action against defendant-appellee, The Philippine American Life Insurance Company (Philam Life), in the Court of First Instance of Manila.
The plaintiffs sought to recover the amount of P5,000.00, representing the face value of a life insurance policy issued on Estefania A. Saturnino, and additional P1,500.00 as attorney’s fees.
The defendant responded with special defenses and a counterclaim for damages resulting from the allegedly unwarranted suit.

The insurance policy involved was a 20-year endowment non-medical insurance, which dispenses with a medical examination but requires detailed disclosure about the applicant's health and medical history.
Estefania A. Saturnino submitted her application on November 16, 1957, witnessed by Philam Life’s agent Edward A. Santos. The policy was issued the same day upon payment of the first-year premium of P339.25.

Estefania A. Saturnino died on September 19, 1958, from pneumonia secondary to influenza.
The appellants, as surviving husband and minor child, demanded payment under the policy, which was denied by Philam Life, prompting the suit.

Prior to the policy issuance, on September 9, 1957, Estefania underwent surgery for cancer involving complete removal of her right breast, pectoral muscles, and affected glands.
Despite this operation and ongoing malignant disease, Estefania represented in her application that:

She had never had cancer or other tumors.
She had not consulted any physician, undergone any operation, or suffered any injury in the prior five years.
She had never been treated for illnesses specific to female organs including the breast.

The application explicitly stated these declarations were a “further basis for the issuance of the policy.”

The non-medical status of the policy meant the prior illness was immaterial.
The insurer’s agent was informed of Estefania’s medical history before submitting the signed blank application.
The insured herself was unaware that her illness was cancer since her doctor never told her.
Philam Life was negligent for not requiring a medical examination.

The trial court found that the insured’s representations were false and material.
The agent denied being informed prior to submission of the application, a factual finding upheld on appeal.
The court rejected negligence on the part of the insurer, recognizing reliance on the insured’s declarations to waive medical examination.
The trial court dismissed both complaint and counterclaim but ordered the return of the premium paid plus interest.

Whether the insured’s false representations regarding her medical history were material and sufficient to avoid the policy.
Whether the non-medical classification of the insurance policy negates the materiality of the misrepresentations.
Whether the insurer was negligent in not requiring a medical examination, thereby precluding coverage denial.
Whether a concealment is excused if the insured was unaware of the true nature of her illness.
Whether the insurer may rescind the contract based on such concealment or misrepresentation.