Commercial Law

Ignacio Saturnino vs The Philippine American Life Insurance Company

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G.R. No. L-16163 – 7 SCRA 316 – Mercantile Law – Insurance Law – Representation – Concealment – Misrepresentation – Fraud

In September 1957, Estefania Saturnino was operated for cancer in which her right breast was removed. She was advised by her surgeon that she’s not totally cured because her cancer was malignant. In November 1957, she applied for an insurance policy under Philamlife (Philippine American Life Insurance Company). She did not disclose the fact that she was operated nor did she disclose any medical histories. Philamlife, upon seeing the clean bill of health from Estefania waived its right to have Estefania undergo a medical checkup. In September 1958, Estefania died of pneumonia secondary to influenza. Her heirs now seek to enforce the insurance claim.

ISSUE: Whether or not Saturnino is entitled to the insurance claim.

HELD: No. The concealment of the fact of the operation is fraudulent. Even if, as argued by the heirs, Estefania never knew she was operated for cancer, there is still fraud in the concealment no matter what the ailment she was operated for. Note also that in order to avoid a policy, it is not necessary that actual fraud be established otherwise insurance companies will be at the mercy of any one seeking insurance.

In this jurisdiction a concealment, whether intentional or unintentional, entitles the insurer to rescind the contract of insurance, concealment being defined as “negligence to communicate that which a party knows and ought to communicate.”

Also, the fact that Philamlife waived its right to have Estefania undergo a medical examination is not negligence. Because of Estefania’s concealment, Philamlife considered medical checkup to be no longer necessary. Had Philamlife been informed of her operation, she would have been made to undergo medical checkup to determine her insurability.

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