G.R. No. 105135 - Sunlife Assurance Co. of Canada vs. Court of Appeals

On April 15, 1986, Robert John B. Bacani applied for and was issued Policy No. 3-903-766-X by Sunlife Assurance Company of Canada, with a face value of ₱100,000.00 and double indemnity for accidental death. The designated beneficiary was his mother, Bernarda Bacani.
The application included questions on medical history:

Question 5 asked about consultations with doctors and diagnostic tests within the past five years. The insured answered 5(a) affirmatively, disclosing only a February 1986 consultation for cough and flu, and denied all other items under Question 5 and Question 6 (which inquired about urine, kidney, or bladder disorders).

On June 26, 1987, the insured died in a plane crash. Bernarda Bacani filed a claim for the policy proceeds.
Sunlife conducted an investigation and discovered that two weeks prior to application, the insured was examined and confined at the Lung Center of the Philippines for renal failure, undergoing urinalysis, ultrasonography, and hematology tests. Believing these undisclosed facts material, Sunlife declared the policy voidable and refunded total premiums of ₱10,172.00.

On November 17, 1988, Bernarda and her husband Rolando Bacani filed a complaint for specific performance in RTC Branch 191, Valenzuela, seeking the policy proceeds. Sunlife answered with a counterclaim and attached medical records from the Lung Center.
On January 14, 1990, the Bacanis filed a Proposed Stipulation conceding they had no evidence to refute concealment. Sunlife’s Requests for Admission went unanswered and were deemed admitted.
Sunlife moved for summary judgment, but the RTC denied it and granted summary judgment in favor of the plaintiffs, awarding ₱100,000 face value, ₱100,000 double indemnity, plus ₱5,000 attorney’s fees. The RTC held that the insured’s non-disclosure was in good faith and immaterial because the policy was “non-medical.”

Sunlife appealed to the Court of Appeals, which affirmed the RTC decision. The CA ruled that (a) the insured’s concealment could not void the policy since his death was unrelated to the concealed facts, and (b) the insurer had waived medical examination and treated the policy as non-medical, rendering health disclosures irrelevant.
The CA denied Sunlife’s motion for reconsideration. Sunlife then filed this petition for review on certiorari under Rule 45.

Whether the insured’s failure to disclose hospitalization and diagnostic tests constituted material concealment justifying rescission.
Whether a good-faith belief that disclosure was unnecessary absolves an insured from the effects of concealment.
Whether waiver of medical examination in a non-medical policy renders prior health disclosures immaterial.
Whether an insurer may rescind a policy for concealment within the two-year contestability period even though the insured’s cause of death was unrelated to the concealed condition.