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SUNLIFE ASSURANCE COMPANY OF CANADA v. CA

FACTS:

Robert John B. Bacani obtained a life insurance contract from the petitioner on April 15, 1986. The policy was valued at P100,000.00 with double indemnity for accidental death, and the designated beneficiary was his mother, respondent Bernarda Bacani. However, when Robert died in a plane crash on June 26, 1987, the petitioner rejected the claim made by Bernarda Bacani. Petitioner claimed that Robert had failed to disclose relevant information regarding his health in the insurance application. Petitioner discovered that prior to his application, Robert had undergone medical examinations and was diagnosed with renal failure. Bernarda Bacani filed an action for specific performance against the petitioner, and the trial court ruled in favor of Bernarda Bacani, ordering the petitioner to pay the insurance benefits. The Court of Appeals affirmed this decision.

ISSUES:

  1. Whether or not the insured's failure to disclose relevant health information is considered concealment.

  2. Whether or not the concealment was made in good faith and with the belief that it need not be disclosed.

  3. Whether or not the waived medical examination by the petitioner affects the materiality of the concealed facts.

  4. Whether or not the facts concealed have a bearing on the cause of death of the insured.

  5. Whether or not the petitioner properly exercised its right to rescind the contract of insurance.

RULING:

  1. The Supreme Court reversed the decision of the Court of Appeals and ruled in favor of the petitioner. The court held that the insured's failure to disclose relevant health information constitutes concealment, regardless of the insured's state of mind or the actual events that followed. The court emphasized that the insured was required to disclose matters relating to his health, and the concealed facts were material and relevant to the approval and issuance of the insurance policy. The court rejected the argument that the petitioner's waiver of the medical examination affects the materiality of the concealed facts, stating that such waiver renders the information required of the applicant even more important. The court also affirmed that the cause of death does not need to be directly related to the concealed fact; it is sufficient that the non-disclosure misled the insurer in assessing the risks and making inquiries. Therefore, the petitioner properly exercised its right to rescind the contract of insurance due to the insured's concealment.