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Vda. de Canilang vs CA- Test of Materiality

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Vda. de Canilang vs CA- Test of Materiality
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  Vda. De Canilang v CAG.R. No. 92492 June 17, 1993,  J. Feliciano,  3 rd  Division Tes o! ae#iali$ Facts: Canilang was found to have suered from sinus tachycardia and acute bronchitis aftera check-up from his doctor. he ne!t day he applied for a #non-medical# insurance policywith respondent $repalife naming his wife helma Canilang as his bene%ciary with the facevalue of &'( )**. +e died of #congestive heart failure # #anemia # and #chronic anemia.# he widow %led a claim with $reat &aci%c which the insurer denied on the ground that theinsured had concealed material information from it. &etitioner then %led a complaintagainst $reat &aci%c for recovery of the insurance proceeds. &etitioner testi%ed that she wasnot aware of any serious illness suered by her late husband and her husband had diedbecause of a kidney disorder. $reat &aci%c presented a physician who testi%ed that the deceased,s insuranceapplication had been approved on the basis of his medical declaration. he e!plained that asa rule medical e!aminations are reuired only in cases where the applicant has indicated inhis application for insurance coverage that he has previously undergone medicalconsultation and hospitali/ation. he 0nsurance Commissioner ordered $reat &aci%c to pay &'( )** plus legal interestand &1 ***.** as attorney,s fees. 2n appeal by $reat &aci%c the Court of ppeals reversed.0t found that the failure of 4aime Canilang to disclose previous medical consultation andtreatment constituted material information which should have been communicated to $reat&aci%c to enable the latter to make proper inuiries. +ence this petition by the widow. %ssue&  5hether or not 4aime Canilang had intentionally concealed material information fromthe insurer6 Ruling&  7es. &etition denied. he relevant statutory provisions as they stood at the time $reat &aci%c issued the contractof insurance and at the time 4aime Canilang died are set out in &.D. 8o. '9* also known asthe 0nsurance Code of '(); which went into eect on '' 4une '();. hese provisions readas follows: Sec. 26. A neglect to communicate that which a party knows and ought tocommunicate, is called a concealment.Sec. 28. Each party to a contract of insurance must communicate to the other,in good faith, all factorswithin his knowledge which are material to thecontract and as to which he makes no warranty, and which the other has not the means of ascertaining. (Emphasis supplied) <nder the foregoing provisions the information concealed must be information which theconcealing party knew and #ought to =have> communicate=d> # that is to say informationwhich was #material to the contract.# he test of materiality is contained in ection 3' of the0nsurance Code of '(); which reads: Sec. !. aterially is to #e determined not #y the e$ent, #ut solely #y the pro#a#le and reasona#le in%uence of the facts upon the party to whomthe communication is due, in forming his estimate of the disad$antages of the proposed contract, or in making his in&uiries. (Emphasis supplied)  he information which 4aime Canilang failed to disclose was material to the ability of $reat&aci%c to estimate the probable risk he presented as a sub?ect of life insurance. +adCanilang disclosed his visits to his doctor the diagnosis made and medicines prescribed bysuch doctor in the insurance application it may be reasonably assumed that $reat &aci%cwould have made further inuiries and would have probably refused to issue a non-medicalinsurance policy or at the very least reuired a higher premium for the same coverage.0n the case at bar the nature of the facts not conveyed to the insurer was such thatthe failure to communicate must have been intentional rather than merely inadvertent. For   4aime Canilang could not have been unaware that his heart beat would at times rise to highand alarming levels and that he had consulted a doctor twice in the two @1A months beforeapplying for non-medical insurance. he Court %nd it diBcult to take seriously the argument that $reat &aci%c hadwaived inuiry into the concealment by issuing the insurance policy notwithstandingCanilang,s failure to set out answers to some of the uestions in the insurance application.uch failure precisely constituted concealment on the part of Canilang. &etitioner,sargument if accepted would obviously erase ection 1) from the 0nsurance Code of '();. Sec. 2'. A concealment whether intentional or unintentional entitles the inured party to rescind a contract of insurance. 0ndeed the last medical consultation took place ?ust the day before theinsurance application was %led. 0n all probability 4aime Canilang went to visit his doctorprecisely because of the ailment.Canilang,s failure to set out answers to some of the uestions in the insurance applicationconstituted concealment.
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