Case Summary (G.R. No. 105135)
Facts of the Insurance Contract
On April 15, 1986, Robert John B. Bacani applied for and obtained a life insurance policy (No. 3-903-766-X) from Sunlife Assurance, with a face value of ₱100,000 and an accidental‐death double indemnity feature. He designated his mother, Bernarda Bacani, as beneficiary. His application included questions about prior physician consultations, diagnostic tests, hospital admissions, and specific disorders, to which he answered only a February 1986 consultation for cough and flu in the affirmative, denying all other inquiries.
Undisclosed Medical History and Death
Two weeks before application, Bacani was hospitalized at the Lung Center of the Philippines for renal failure, undergoing urinalysis, ultrasonography, and hematology tests. On June 26, 1987, he perished in an aircraft accident. His mother filed a claim with Sunlife, which refused payment on grounds of material misrepresentation and non‐disclosure, returning premiums amounting to ₱10,172.
Procedural History
In November 1988, Bernarda and Rolando Bacani sued Sunlife for specific performance in the RTC, attaching Lung Center medical records. In January 1990 they stipulated they had no evidence to dispute concealment/misrepresentation. Sunlife’s requests for admission went unchallenged, and it moved for summary judgment. Contrary to that motion, the RTC rendered judgment in favor of the Bacanis, awarding policy proceeds, accidental death benefits, attorney’s fees, and costs, dismissing Sunlife’s counterclaim. The Court of Appeals affirmed, finding (a) the concealed facts bore no causal relation to the death and (b) the policy was “non‐medical,” rendering health history immaterial. This Supreme Court petition followed denial of reconsideration.
Issue: Concealment and Materiality under the Insurance Code
The principal issue is whether the insured’s failure to disclose his hospitalization and renal‐failure diagnosis constituted actionable concealment that justified rescission of the policy, regardless of the eventual cause of death.
Legal Analysis and Ruling
- Insurance Code Section 26 mandates full disclosure in good faith of all facts material to the contract, and Section 31 defines materiality by the reasonable influence on the insurer’s risk assessment. Concealment is a neglect to communicate a known material fact.
- “Good faith” on the insured’s part does not excuse non-disclosure of material facts (Vda. de Canilang v. CA, 223 SCRA 443). The concealed renal‐failure hospitalization would have prompted either a higher premium, additional underwriting inquiries, or outright rejection.
- Waiver of a medical examination in a “non‐med
Case Syllabus (G.R. No. 105135)
Facts of the Case
- On April 15, 1986, Robert John B. Bacani procured Life Insurance Policy No. 3-903-766-X from Sunlife Assurance Company of Canada, with a face value of ₱100,000.00 and double indemnity for accidental death.
- The designated beneficiary under the policy was Bernarda Bacani, the insured’s mother.
- 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 prior hospitalization for renal failure at the Lung Center of the Philippines, complete with urinalysis, ultrasonography, and hematology tests.
- Sunlife asserted that the insured misrepresented material health facts in his application, specifically:
• He answered affirmatively only to a February 1986 consultation for cough and flu at Chinese General Hospital and denied other medical consultations, tests, or admissions within the past five years.
• He denied ever having urine, kidney, or bladder disorders, despite recent hospitalization for renal failure. - Based on these misrepresentations, Sunlife rejected the claim, returned premiums amounting to ₱10,172.00, and declared the contract voidable.
Procedural History
- November 17, 1988: Bernarda and Rolando Bacani filed an action for specific performance before the Regional Trial Court (RTC), Branch 191, Valenzuela.
- Sunlife answered with a counterclaim and attached Lung Center medical records.
- January 14, 1990: Private respondents filed a “Proposed Stipulation with Prayer for Summary Judgment,” admitting they had no evidence to refute concealment/misrepresentat