[39] Yu Pang Cheng v CA FACTS:
GR No. L-12465 | May 29, 1959 | Contract of Insurance | Ma. Hazel Joy Faco 1. Yu Pang Eng submitted parts II and III of his application for insurance
consisting of the medical declaration made by him to the medical
Petitioner: Yu Pang Cheng alias Yu Pang Ching
examiner of insurance company and the medical examiner's report. He
Respondents: Court of Appeals
submitted part I of his application which is the declaration made by him
to an agent of defendant based on said application, and upon payment
of the first premium, the insurance company issued the insurance policy.
Recit-Ready: Plaintiff brought this action to collect from defendant the sum of Php
2. Yu Pang Eng entered St. Luke's Hospital for medical treatment but he
10,000 value of an insurance policy taken upon the life of one Yu Pang Eng, plus
died eventually. According to the death certificate, he died of "infiltrating
interest thereon at the legal rate, moral damages, attorneys fees and the costs of
medullary carcinoma, Grade 4, advanced cardiac and of lesser curvature,
action. Defendant, in its answer, set up the defense that the insured was guilty of
stomach metastases spleen."
misrepresentation and concealment of material facts in that he gave false and
3. Plaintiff, brother and beneficiary of the insured, demanded from
untruthful answers to certain questions asked him in his application for insurance
defendant the payment of the proceeds of the insurance policy and
which were material to the risk insured against and have the effect of avoiding the
when the demand was refused, he brought the present action.
insurance policy. The issue is whether the insured is guilty of concealment of
4. Defendant, in its answer, set up the defense that the insured was guilty
some facts material to the risk insured against which has the effect of avoiding the
of misrepresentation and concealment of material facts in that he gave
policy (Yes)
false and untruthful answers to certain questions asked him in his
application for insurance which were material to the risk insured against
In an action on a life insurance policy where the evidence conclusively shows that
and have the effect of avoiding the insurance policy.
the answers to questions concerning diseases were untrue, the truth or falsity of
5. After trial, the court rendered judgment ordering defendant to pay
the answers become the determining factor. If the policy was procured by
plaintiff the sum of P10,000.00, with legal interest from the filing of the
fraudulent representations, the contract of insurance apparently set forth therein
complaint, plus the sum of P2,000.00 as attorney's fees, and the costs of
was never legally existent. It can fairly be assumed become that had the true facts
suit. On appeal, the Court of Appeals reversed the decision of the trial
been disclosed by he assured, the insurance would never have been granted.
court, holding that the insured was guilty from liability. Hence the
Doctrine: Our Insurance Law provides that a neglect to communicate that which a present petition for review.
party knows and ought to communicate, is called concealment" (Section 25, Act
ISSUES: Whether the insured is guilty of concealment of some facts material to
No. 2427). Whether intentional or unintentional, the concealment entitles the
the risk insured against which has the effect of avoiding the policy (Yes)
insurer to rescind the contract of insurance (Section 26). Our law even requires the
insured to communicate to the insurer all facts within his knowledge which are
RATIO:
material to the contract and which the other party has not the means of
ascertaining (Section 27), and the materiality is to be determined not by the event 1. It should be noted that the insured's confinement in the Chinese General
but solely by the probable and reasonable influence of the facts upon the party to Hospital took place from January 29, 1950 to February 11, 1950,
whom the communication is due (Section 30). whereas his application for insurance wherein he stated his answers to
the questions propounded to him by the examining physician of
defendant was submitted to defendant on September 5, 1950. It is
apparent that when the insured gave his answers regarding his previous
ailment, particularly with regard to "Gastritis, Ulcer of the Stomach or any
disease of that organ" and "Vertigo, Dizziness, Fainting-spells or
Unconsciousness", he concealed the ailment of which he was treated in
the Chinese General Hospital which precisely has direct connection with
the subject of the questions propounded. The negative answers given by
the insured regarding his previous ailment, or his concealment of the
fact that he was hospitalized and treated for sometime of peptic ulcer
and had suffered form "dizziness, anemia, abdominal pains and tarry
stools", deprived defendant of the opportunity to make the necessary
inquiry as to the nature of his past illness so that it may form its
estimate relative to the approval of his application.
2. Had defendant been given such opportunity, considering the previous
illness of the insured as disclosed by the records of the Chinese General
Hospital, defendant would probably had never consented to the
issuance of the policy in question. In fact, according to the death
certificate, the insured died of "infiltrating medullary carcinoma, Grade 4,
advanced cardiac and of lesser curvature, stomach metastases spleen",
which may have a direct connection with his previous illness.
3. Our Insurance Law provides that a neglect to communicate that which a
party knows and ought to communicate, is called concealment" (Section
25, Act No. 2427). Whether intentional or unintentional, the concealment
entitles the insurer to rescind the contract of insurance (Section 26). Our
law even requires the insured to communicate to the insurer all facts
within his knowledge which are material to the contract and which the
other party has not the means of ascertaining (Section 27), and the
materiality is to be determined not by the event but solely by the
probable and reasonable influence of the facts upon the party to whom
the communication is due (Section 30).
4. In an action on a life insurance policy where the evidence conclusively
shows that the answers to questions concerning diseases were untrue,
the truth or falsity of the answers become the determining factor. If the
policy was procured by fraudulent representations, the contract of
insurance apparently set forth therein was never legally existent. It can
fairly be assumed become that had the true facts been disclosed by he
assured, the insurance would never have been granted.
