G.R. No. L-24899 – 51 Phil. 725 – Mercantile Law – Insurance Law – Representation – Concealment – Rescission of an Insurance Contract
In February 1925, Bernardo Argente and his wife applied for a joint life insurance under West Coast Life Insurance Company (West Coast). The couple was examined by the insurance company doctor (Doctor Sta. Ana). The couple disclosed to the doctor that they never had any serious medical histories; that they were never confined; that Vicenta De Ocampo (wife of Argente) was not an alcoholic. Doctor Sta. Ana then recommended the approval of the application. In May 1925, the couple were issued with the insurance policy. In November 1925, Vicenta died. West Coast Life denied the subsequent insurance claim filed by Argente as it averred that the application made in June was attended by fraud because the couple failed to disclose the fact that each of them were actually confined prior to their application; that Vicenta in particular was diagnosed for alcoholism and ultimately for psycho-neurosis; that in sum, their statement as to their health and previous illnesses within the last 5-7 years prior to their application were untrue.
Argente conceded to the allegations of West Coast however he stated that those facts were actually disclosed to Dr. Sta. Ana however Dr. Sta. Ana connived with the insurance agent hence he failed to record them in the medical reports. Further, Argente averred that if West Coast did have the right to rescind the insurance, it should have done so prior to the filing of a suit involving the insurance claim.
ISSUE: Whether or not Argente is entitled to the insurance claim.
HELD: No. 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 that had the true facts been disclosed by the assured, the insurance would never have been granted. The allegations of Argente do not have a leg to stand on, Dr. Sta. Ana has no motive whatsoever and such alleged illicit act will only destroy his reputation as a physician.
As to the allegation of Argente regarding the failure of West Coast to rescind the insurance prior to the filing of this case, there are two answers:
1. The failure of West Coast to rescind the contract cannot prejudice any defense to the suit which concealment may furnish.
2. Prior to the filing of this case, West Coast sent a notice to Argente advising him that the policy is being canceled due to the concealment and that his premium is being refunded – this operates as a rescission to the contract of insurance.