Case Summary (G.R. No. 109404)
Insurance Application and Pre-Existing Conditions
On August 4, 1982, Jaime Canilang applied for a non-medical life insurance policy (Policy No. 345163, face amount ₱19,700) with Great Pacific, declaring under oath that within the past five years he had neither been hospitalized nor consulted a physician for any heart, lung, kidney or similar conditions. He left the “Exceptions” section blank, notwithstanding two consultations with Dr. Claudio (June 18, 1982: diagnosed with sinus tachycardia; August 3, 1982: diagnosed with acute bronchitis) and prescribed Trazepam and Aptin.
Death and Claim Denial
Jaime Canilang died on August 5, 1983, of congestive heart failure and chronic anemia. His widow filed for benefits, which Great Pacific denied on December 5, 1983, on the ground of fraudulent concealment of material health information.
Insurance Commission Proceedings
Before the Insurance Commission, petitioner testified she was unaware of any serious illness and believed her husband died of a kidney disorder. Petitioner offered Dr. Claudio’s deposition confirming the two consultations; Great Pacific presented its medical underwriter, Dr. Quismorio, who explained that Great Pacific waived medical exams only where the applicant denied prior consultations.
Insurance Commissioner’s Decision
On November 5, 1985, Commissioner Ansaldo ordered payment of ₱19,700 plus interest and ₱2,000 attorneys’ fees, holding that:
- Canilang’s ailments were minor and immaterial to policy issuance;
- Great Pacific waived inquiry by issuing the policy despite unanswered medical questions;
- There was no intentional concealment—Canilang believed his condition was a simple cold;
- Batas Pambansa Blg. 874 (effective June 1, 1985) did not apply, as it post-dated the policy.
Court of Appeals Ruling
On appeal, the Court of Appeals reversed, concluding that:
- The pretrial issue was whether Canilang made a material concealment, not whether it was intentional;
- His failure to disclose prior treatment was a material omission necessitating rescission;
- The rule in Ng Gan Zee (misrepresentation) did not govern concealment cases.
Issue on Supreme Court Review
Whether (1) the issue before the Insurance Commission required proof of intentional concealment, and (2) non-disclosure of Canilang’s prior medical consultations amounted to fraud or was waived by Great Pacific.
Applicable Law (1987 Constitution; Insurance Code of 1978)
- Sec. 26 (concealment defined)
- Sec. 27 (any concealment entitles injured party to rescind)
- Sec. 28 (duty of utmost good faith; material facts must be communicated)
- Sec. 31 (materiality measured by probable and reasonable influence on insurer)
Materiality of Withheld Information
“Sinus tachycardia” (heart rate over 100 bpm) and “acute bronchitis” are objectively material: they affect risk assessment, underwriting decisions on coverage, premium rates, or medical examinations. Great Pacific plausibly would have imposed higher premiums or declined coverage had it known of these conditions.
Intentional vs. Unintentional Concealment
Section 27’s omission of “intentional or unintentional” is grammatical surplus; concealment in any form author
...continue readingCase Syllabus (G.R. No. 109404)
Facts
- On 18 June 1982, Jaime Canilang consulted Dr. Wilfredo B. Claudio and was diagnosed with “sinus tachycardia,” for which he received Trazepam and Aptin.
- On 3 August 1982, the same physician diagnosed him with “acute bronchitis.”
- On 4 August 1982, Jaime applied for a non-medical life insurance policy (Policy No. 345163, face value ₱19,700) with Great Pacific Life Assurance Company, naming his wife, Thelma Vda. de Canilang, as beneficiary.
- The policy became effective on 9 August 1982.
- On 5 August 1983, Jaime died of congestive heart failure, anemia, and chronic anemia.
- Thelma filed a claim; Great Pacific denied it on 5 December 1983 for alleged concealment of material health information.
Procedural History
- Thelma brought a complaint before the Insurance Commission seeking payment of the policy proceeds.
- During the Insurance Commission hearing, Thelma testified she was unaware of any serious illness and believed her husband died of a kidney disorder.
- Petitioner presented Dr. Claudio’s deposition confirming prior treatment for sinus tachycardia and acute bronchitis.
- Great Pacific presented Dr. Esperanza Quismorio, who explained that non-medical policies dispense with medical exams unless the applicant indicates prior consultations.
Insurance Commissioner’s Decision (5 November 1985)
- Ordered Great Pacific to pay ₱19,700 plus legal interest and ₱2,000 attorney’s fees.
- Held the insured’s ailments were not so serious that disclosure would have prevented issuance of the policy.
- Found Great Pacific waived its inquiry rights by issuing the policy despite blanks in the medical declaration.
- Concluded concealment was not intentional, as the insured believed he had only a simple cold.
- Determined BP Blg. 874 (effective 1 June 1985) voiding insurance for any concealment did not apply to this 1982 contract.