NG GAN ZEE v. ASIAN CRUSADER LIFE ASSURANCE CORP.

G.R. NO. L-30685

Facts:
On May 12, 1962, Kwong Nam applied for a 20-year endowment insurance on his life
having his wife, Ng Gan Zeen as beneficiary. Upon recieipt of the required premium the insurer
approved the application and issued the corresponding policy. On December 6, 1963, Kwong
Nam died of cancer of the liver with metastasis.
On January 10, 1964, the wife presented a claim for the payment of the face value of the
policy. Appellant denied the claim on the ground that the answers given by the insured in his
application were untrue.
Appellant alleged that the insured was guilty of misrepresentation when he answered
No on the question Has any life insurance company ever refused your application for
insurance or for reinstatement of a lapsed policy or offered you a policy different from that
applied for?
As pointed out by the insurer, the insured had in January 1962 applied for reinstatement
of his lapsed insurance policy with Insular Life Insurance Co.
Appellant further maintains that when the insured was examined in connection with his
application, he gave false and misleading information as to his ailment and previous operation,
because he was operated for a tumor of the stomach. The tumor was associated with ulcer of the
stomach. The tumor taken out was hard and of a hens egg size.
Issue:
Whether or not the insurer is committed concealment to warrant the disapproval of the
claims over the insurance policy?
Held:
Concealment exists where the assured had knowledge of a fact material to the risk, and
honesty, good faith, and fair dealing requires that he should communicate it to the insurer, but he
designedly and intentionally withholds the same.
Assuming that the aforesaid answer given by the insured was false, the law nevertheless
requires that fraudulent intent on the part of the insured be established to entitle the insurer to
rescind the contract.
It bears emphasis that Kwong Nam had informed appellant that the tumor for which he
was operated on was associated with peptic ulcer of the stomach. In the absence of evidence that
the insured had sufficient medical knowledge as to enable him to distinguish between peptic
ulcer and a tumor, his statement should be construed as an expression made in good faith of his

belief as to the nature of his ailment and operation. Such statement must be presumed to have
been made by him without knowledge of its incorrectness and without any deliberate intent on
his part to mislead the applellant.

GREAT PACIFIC LIFE ASSURANCE CO. v. CA

G.R. NO. L-31845
Facts:
On March 14, 1957, Ngo Hing filed an application with Great Pacific Life Insurance Co.
for a 20 year endowment on the life of his 1 year old daughter Helen Go. Respondent supplied
the essential data which Lapulapu D. Mondragon, Branch Manager of the Pacific Life in Cebu
City wrote on the corresponding form in his own handwriting. Ngo Hing paid the annual
premium but retained his commission for being a duly authorized agent of Pacific Life. On April
30, 1957, Mondragon received a letter from Pacific Life disapproving the insurance application.
The letter stated that the said life insurance application is not available for minors below seven
years old, but Pacific Life can consider the same under the Juvenile Triple Action.
The non-acceptance of the the application was not communicated by Mondragon to Ngo
Hing. Instead, Mondragon wrote back Pacific Life strongly recommending the approval of the 20
year endowment insurance plan pointing out that since 1954 the customers, were asking for uch
coverage.
On May 28, 1957 Helen Go died of influenza with complication of bronchopneumonia.
Respondent sought the payment of the proceeds of the insurance, but having failed on his efforts,
he filed an action before the Court of First Instance in Cebu.
Issue:
Whether or not the binding receipt constituted a temporary contract of the life insurance?
And whether or not Ngo Hing concealed the state of health and physical condition of Helen Go?
Held:
The binding deposit receipts is intended to be merely a provisional or temporary
insurance contract and only upon compliance of the following condition: (1) that the company
shall be satisfied that the applicant was insurable on standard rates; (2) that if the company does
not accept the application and offers to issue a policy for a different plan, the insurance contract
shall not be binding until the applicant accepts the policy offered; otherwise, the deposit shall be
returned; and (3) that if the applicant is not able according to the standard rates, and the company
disapproves the application, the insurance applied for shall not be in force at any time, and the
premium paid shall be returned to the applicant.
Clearly implied from the aforesaid conditions is that the binding deposit receipt in
question is merely an acknowledgment, on behalf of the company, that the latter's branch office
had received from the applicant the insurance premium and had accepted the application subject
for processing by the insurance company; and that the latter will either approve or reject the
same on the basis of whether or not the applicant is "insurable on standard rates." Since
petitioner Pacific Life disapproved the insurance application of respondent Ngo Hing, the
binding deposit receipt in question had never become in force at any time.

Pacific Life disapproved the insurance application in question on the ground that it is not
offering the twenty-year endowment insurance policy to children less than seven years of age.
What it offered instead is another plan known as the Juvenile Triple Action, which private
respondent failed to accept. In the absence of a meeting of the minds between petitioner Pacific
Life and private respondent Ngo Hing over the 20-year endowment life insurance in the amount
of P50,000.00 in favor of the latter's one-year old daughter, and with the non-compliance of the
above quoted conditions stated in the disputed binding deposit receipt, there could have been no
insurance contract duly perfected between them. Accordingly, the deposit paid by private
respondent shall have to be refunded by Pacific Life.
Relative to the second issue of alleged concealment, the Court is of the firm belief that
private respondent had deliberately concealed the state of health and physical condition of his
daughter Helen Go. Where private respondent supplied the required essential data for the
insurance application form, he was fully aware that his one-year old daughter is typically a
mongoloid child. Such a congenital physical defect could never be ensconced nor disguised.
Nonetheless, private respondent, in apparent bad faith, withheld the fact material to the risk to be
assumed by the insurance company. As an insurance agent of Pacific Life, he ought to know, as
he surely must have known his duty and responsibility to such a material fact. Had he mentioned
said significant fact in the insurance application form, Pacific Life would have verified the same
and would have had no choice but to disapprove the application outright.

SUNLIFE ASSURANCE COMPANY OF CANADA v. CA

Facts:
On April 15, 1986, Robert John B. Bacani procured a life insurance contract for himself
from petitioner. He was issued a policy valued at P100,000.00, with double indemnity in case of
accidental death. The designated beneficiary was his mother, respondent Bernarda Bacani.
On June 26, 1987, the insured died in a plane crash. Respondent Bernarda Bacani filed a
claim with petitioner, seeking the benefits of the insurance policy taken by her son. Petitioner
conducted an investigation and its findings prompted it to reject the claim. Petitioner informed
respondent Bernarda Bacani, that the insured did not disclose material facts relevant to the
issuance of the policy, thus rendering the contract of insurance voidable.
Petitioner discovered that two weeks prior to his application for insurance, the insured
was examined and confined at the Lung Center of the Philippines, where he was diagnosed for
renal failure.
Respondent Bernarda Bacani and her husband, respondent Rolando Bacani, filed an
action for specific performance against petitioner with the Regional Trial Court. The trial court
concluded that the facts concealed by the insured were made in good faith and under a belief that
they need not be disclosed. Moreover, it held that the health history of the insured was
immaterial since the insurance policy was "non-medical".
The appellate court ruled that petitioner cannot avoid its obligation by claiming
concealment because the cause of death was unrelated to the facts concealed by the insured. It
also sustained the finding of the trial court that matters relating to the health history of the
insured were irrelevant since petitioner waived the medical examination prior to the approval and
issuance of the insurance policy. Moreover, the appellate court agreed with the trial court that the
policy was "non-medical."
Issue:
Whether or not there was material concealment on the part of the insured?
Held:
The Insurance Code is explicit in requiring a party to a contract of insurance to
communicate to the other, in good faith, all facts within his knowledge which are material to the
contract and as to which he makes no warranty, and which the other has no means of
ascertaining. 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 communication is due, in forming his
estimate of the disadvantages of the proposed contract or in making his inquiries. The terms of
the contract are clear. The insured is specifically required to disclose to the insurer matters
relating to his health.

The information which the insured failed to disclose was material and relevant to the
approval and issuance of the insurance policy. The matters concealed would have definitely
affected petitioner's action on his application, either by approving it with the corresponding
adjustment for a higher premium or rejecting the same. Moreover, a disclosure may have
warranted a medical examination of the insured by petitioner in order for it to reasonably assess
the risk involved in accepting the application.
Thus, "goad faith" is no defense in concealment. The insured's failure to disclose the fact
that he was hospitalized for two weeks prior to filing his application for insurance, raises grave
doubts about his bonafides. It appears that such concealment was deliberate on his part.
We, therefore, rule that petitioner properly exercised its right to rescind the contract of
insurance by reason of the concealment employed by the insured. It must be emphasized that
rescission was exercised within the two-year contestability period as recognized in Section 48 of
The Insurance Code.

ISABEL ROQUE v. CA
G.R. NO. L-66935
Facts:
On February 19, 1972, the Manila Bay Lighterage Corporation entered into a contract
with the petitioners whereby the former would load and carry on board its barge Mable 10 about
422.18 cubic meters of logs from Malampaya Sound, Palawan to North Harbor, Manila. The
petitioners insured the logs against loss for P100,000.00 with respondent Pioneer Insurance and
Surety Corporation.
On February 29, 1972, the petitioners loaded on the barge, 811 pieces of logs at
Malampaya Sound, Palawan for carriage and delivery to North Harbor, Port of Manila, but the
shipment never reached its destination because Mable 10 sank with the 811 pieces of logs
somewhere off Cabuli Point in Palawan on its way to Manila. As alleged by the petitioners in
their complaint and as found by both the trial and appellate courts, the barge where the logs were
loaded was not seaworthy such that it developed a leak. The appellate court further found that
one of the hatches was left open causing water to enter the barge and because the barge was not
provided with the necessary cover or tarpaulin, the ordinary splash of sea waves brought more
water inside the barge.
A letter was sent to respondent Pioneer claiming the full amount of P100,000.00 under
the insurance policy but respondent refused to pay on the ground that its liability depended upon
the "Total loss by Total Loss of Vessel only". Hence, petitioners commenced Civil Case No.
86599 against Manila Bay and respondent Pioneer.
The trial court ruled in favor of petitioner. However, the appellate court modified the trial
court's decision and absolved Pioneer from liability after finding that there was a breach of
implied warranty of seaworthiness on the part of the petitioners and that the loss of the insured
cargo was caused by the "perils of the ship" and not by the "perils of the sea". It ruled that the
loss is not covered by the marine insurance policy.
Issue:
Whether or not the insurance company is liable to pay the face value of the policy?
Held:
Section 113 of the Insurance Code provides: In every marine insurance upon a ship or
freight, or freightage, or upon anything which is the subject of marine insurance, a warranty is
implied that the ship is seaworthy.
Since the law provides for an implied warranty of seaworthiness in every contract of
ordinary marine insurance, it becomes the obligation of a cargo owner to look for a reliable
common carrier which keeps its vessels in seaworthy condition. The shipper of cargo may have
no control over the vessel but he has full control in the choice of the common carrier that will

transport his goods. Or the cargo owner may enter into a contract of insurance which specifically
provides that the insurer answers not only for the perils of the sea but also provides for coverage
of perils of the ship.