No. L-30685.

 May 30, 1983.*

NG GAN ZEE, plaintiff-appellee, vs. ASIAN CRUSADER LIFE ASSURANCE CORPORATION, defendant-appellant.
Mercantile Law; Insurance; Concealment; When concealment exists; Nature of concealment.—Thus, “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 assurer, but he designedly and intentionally withholds the same.” It has also been held “that the concealment
must, in the absence of inquiries, be not only material, but fraudulent, or the fact must have been intentionally withheld.”
Same; Same; Same; Misrepresentation; Fraudulent intent of insured must be established to entitle insurer to rescind insurance
contract; Misrepresentation, as defense of insurer, is an affirmative defense which must be proved.—Sec. 27 of the Insurance Law,
abovequoted, nevertheless requires that fraudulent intent on the part of the insured be established to entitle the insurer to rescind the
contract. And as correctly observed by the lower court, “misrepresentation as a defense of the insurer to avoid liability is an
‘affirmative’ defense. The duty to establish such a defense by satisfactory and convincing evidence rests upon the defendant. The
evidence before the Court does not clearly and satisfactorily establish that defense.”
Same; Same; Same; Statement of insured that tumor he was operated on was associated with ulcer of the stomach, an
expression made in good faith as to the nature of his ailment and operation and without knowledge of its incorrectness and without
any deliberate intent to mislead the insurer.—It bears emphasis that Kwong Nam had informed the appellant’s medical examiner that
the tumor for which he was operated on was “associated with 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 that said tumor was
“associated with ulcer of the stomach,” should be construed as an expression made in good faith of his belief as to the nature of his
ailment and operation. Indeed, 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 appellant.
________________
*
 SECOND DIVISION.
462
462  SUPREME COURT REPORTS ANNOTATED 
Ng Gan Zee vs. Asian Crusader Life Assurance Corp.
Same; Same; Same; Failure of insurer to undertake a further inquiry on insurance application on the question of the insured’s
ailment and operation which is important in determination of grant of insurance or not, constitutes waiver by insurer of imperfection
in the answer and renders omission to answer more fully immaterial; Case at bar.—Where, “upon the face of the application, a
question appears to be not answered at all or to be imperfectly answered, and the insurers issue a policy without any further inquiry,
they waive the imperfection of the answer and render the omission to answer more fully immaterial. As aptly noted by the lower court,
“if the ailment and operation of Kwong Nam had such an important bearing on the question of whether the defendant would undertake
the insurance or not, the court cannot understand why the defendant or its medical examiner did not make any further inquiries on
such matters from the Chinese General Hospital or require copies of the hospital records from the appellant before acting on the
application for insurance. The fact of the matter is that the defendant was too eager to accept the application and receive the insured’s
premium. It would be inequitable now to allow the defendant to avoid liability under the circumstances.”

APPEAL from the judgment of the Court of First Instance of Manila.

The facts are stated in the opinion of the Court.

     Alberto Q. Ubay for plaintiff-appellee.
     Santiago F. Alidio for defendant-appellant.

ESCOLIN, J.:

ESCOLIN, J.:

This is an appeal from the judgment of the Court of First Instance of Manila, ordering the appellant Asian-Crusader Life Assurance
Corporation to pay the face value of an insurance policy issued on the life of Kwong Nam the deceased husband of appellee Ng Gan
Zee. Misrepresentation and concealment of material facts in obtaining the policy were pleaded to avoid the policy. The lower court
rejected the appellant's theory and ordered the latter to pay appellee "the amount of P 20,000.00, with interest at the legal rate from
July 24, 1964, the date of the filing of the complaint, until paid, and the costs. " 

The Court of Appeals certified this appeal to Us, as the same involves solely a question of law. 

1
On May 12, 1962, Kwong Nam applied for a 20-year endowment insurance on his life for the sum of P20,000.00, with his wife,
appellee Ng Gan Zee as beneficiary. On the same date, appellant, upon receipt of the required premium from the insured, approved the
application and issued the corresponding policy. On December 6, 1963, Kwong Nam died of cancer of the liver with metastasis. All
premiums had been religiously paid at the time of his death. 

On January 10, 1964, his widow Ng Gan Zee presented a claim in due form to appellant for payment of the face value of the policy.
On the same date, she submitted the required proof of death of the insured. Appellant denied the claim on the ground that the answers
given by the insured to the questions appealing in his application for life insurance were untrue. 

Appellee brought the matter to the attention of the Insurance Commissioner, the Hon. Francisco Y. Mandamus, and the latter, after
conducting an investigation, wrote the appellant that he had found no material concealment on the part of the insured and that,
therefore, appellee should be paid the full face value of the policy. This opinion of the Insurance Commissioner notwithstanding,
appellant refused to settle its obligation. 

Appellant alleged that the insured was guilty of misrepresentation when he answered "No" to the following question appearing in the
application for life insurance- 

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? If, so, name company and date. 

In its brief, appellant rationalized its thesis thus: 

... As pointed out in the foregoing summary of the essential facts in this case, the insured had in January, 1962,
applied for reinstatement of his lapsed life insurance policy with the Insular Life Insurance Co., Ltd, but this was
declined by the insurance company, although later on approved for reinstatement with a very high premium as a
result of his medical examination. Thus notwithstanding the said insured answered 'No' to the [above] question
propounded to him. ... 1

The lower court found the argument bereft of factual basis; and We quote with approval its disquisition on the matter- 

On the first question there is no evidence that the Insular Life Assurance Co., Ltd. ever refused any application of
Kwong Nam for insurance. Neither is there any evidence that any other insurance company has refused any
application of Kwong Nam for insurance. 

... The evidence shows that the Insular Life Assurance Co., Ltd. approved Kwong Nam's request for reinstatement
and amendment of his lapsed insurance policy on April 24, 1962 [Exh. L-2 Stipulation of Facts, Sept. 22, 1965). The
Court notes from said application for reinstatement and amendment, Exh. 'L', that the amount applied for was
P20,000.00 only and not for P50,000.00 as it was in the lapsed policy. The amount of the reinstated and amended
policy was also for P20,000.00. It results, therefore, that when on May 12, 1962 Kwong Nam answered 'No' to the
question whether any life insurance company ever refused his application for reinstatement of a lapsed policy he did
not misrepresent any fact. 

... the evidence shows that the application of Kwong Nam with the Insular Life Assurance Co., Ltd. was for the
reinstatement and amendment of his lapsed insurance policy-Policy No. 369531 -not an application for a 'new
insurance policy. The Insular Life Assurance Co., Ltd. approved the said application on April 24, 1962. Policy No.
369531 was reinstated for the amount of P20,000.00 as applied for by Kwong Nam [Exhs. 'L', 'L-l' and 'L-2']. No
new policy was issued by the Insular Life Assurance Co., Ltd. to Kwong Nam in connection with said application
for reinstatement and amendment. Such being the case, the Court finds that there is no misrepresentation on this
matter. 2

Appellant further maintains that when the insured was examined in connection with his application for life insurance, he gave the
appellant's medical examiner false and misleading information as to his ailment and previous operation. The alleged false statements
given by Kwong Nam are as follows: 

Operated on for a Tumor [mayoma] of the stomach. Claims that Tumor has been associated with ulcer of stomach.
Tumor taken out was hard and of a hen's egg size. Operation was two [2] years ago in Chinese General Hospital by
Dr. Yap. Now, claims he is completely recovered. 

2
To demonstrate the insured's misrepresentation, appellant directs Our attention to: 

[1] The report of Dr. Fu Sun Yuan the physician who treated Kwong Nam at the Chinese General Hospital on May 22, 1960, i.e.,
about 2 years before he applied for an insurance policy on May 12, 1962. According to said report, Dr. Fu Sun Yuan had diagnosed
the patient's ailment as 'peptic ulcer' for which, an operation, known as a 'sub-total gastric resection was performed on the patient by
Dr. Pacifico Yap; and 

[2] The Surgical Pathology Report of Dr. Elias Pantangco showing that the specimen removed from the patient's body was 'a portion
of the stomach measuring 12 cm. and 19 cm. along the lesser curvature with a diameter of 15 cm. along the greatest dimension. 

On the bases of the above undisputed medical data showing that the insured was operated on for peptic ulcer", involving the excision
of a portion of the stomach, appellant argues that the insured's statement in his application that a tumor, "hard and of a hen's egg size,"
was removed during said operation, constituted material concealment. 

The question to be resolved may be propounded thus: Was appellant, because of insured's aforesaid representation, misled or deceived
into entering the contract or in accepting the risk at the rate of premium agreed upon? 

The lower court answered this question in the negative, and We agree. 

Section 27 of the Insurance Law [Act 2427] provides: 

Sec. 27. Such party a contract of insurance must communicate to the other, in good faith, all facts within his
knowledge which are material to the contract, and which the other has not the means of ascertaining, and as to which
he makes no warranty. 3

Thus, "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 assurer, but he designedly and intentionally withholds the same." 4

It has also been held "that the concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact must have
been intentionally withheld." 5

Assuming that the aforesaid answer given by the insured is false, as claimed by the appellant. Sec. 27 of the Insurance Law, above-
quoted, nevertheless requires that fraudulent intent on the part of the insured be established to entitle the insurer to rescind the
contract. And as correctly observed by the lower court, "misrepresentation as a defense of the insurer to avoid liability is an
'affirmative' defense. The duty to establish such a defense by satisfactory and convincing evidence rests upon the defendant. The
evidence before the Court does not clearly and satisfactorily establish that defense." 

It bears emphasis that Kwong Nam had informed the appellant's medical examiner that the tumor for which he was operated on was
"associated with 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 that said tumor was "associated with ulcer of the stomach, " should
be construed as an expression made in good faith of his belief as to the nature of his ailment and operation. Indeed, 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 appellant. 

While it may be conceded that, from the viewpoint of a medical expert, the information communicated was imperfect, the same was
nevertheless sufficient to have induced appellant to make further inquiries about the ailment and operation of the insured. 

Section 32 of Insurance Law [Act No. 24271 provides as follows: 

Section 32. The right to information of material facts maybe waived either by the terms of insurance or by neglect to
make inquiries as to such facts where they are distinctly implied in other facts of which information is
communicated. 

It has been held that where, upon the face of the application, a question appears to be not answered at all or to be imperfectly
answered, and the insurers issue a policy without any further inquiry, they waive the imperfection of the answer and render the
omission to answer more fully immaterial. 6

3
As aptly noted by the lower court, "if the ailment and operation of Kwong Nam had such an important bearing on the question of
whether the defendant would undertake the insurance or not, the court cannot understand why the defendant or its medical examiner
did not make any further inquiries on such matters from the Chinese General Hospital or require copies of the hospital records from
the appellant before acting on the application for insurance. The fact of the matter is that the defendant was too eager to accept the
application and receive the insured's premium. It would be inequitable now to allow the defendant to avoid liability under the
circumstances." 

Finding no reversible error committed by the trial court, the judgment appealed from is hereby affirmed, with costs against appellant
Asian-Crusader life Assurance Corporation. 

SO ORDERED.

4
 G.R. No. 211212. June 8, 2016.*
 
SUN LIFE OF CANADA (PHILIPPINES), INC., petitioner, vs. MA. DAISY S. SIBYA, JESUS MANUEL S. SIBYA III,
JAIME LUIS S. SIBYA, and THE ESTATE OF THE DECEASED ATTY. JESUS SIBYA, JR., respondents.
Insurance Law; Concealment; Misrepresentation; Contestability Period; In Manila Bankers Life Insurance Corporation v.
Aban, 702 
_______________

*  THIRD DIVISION.
 
 
46
46 SUPREME COURT REPORTS ANNOTATED
Sun Life of Canada (Philippines), Inc. vs. Sibya
SCRA 417 (2013), the Supreme Court (SC) held that if the insured dies within the two (2)-year contestability period, the insurer
is bound to make good its obligation under the policy, regardless of the presence or lack of concealment or misrepresentation.—
In Manila Bankers Life Insurance Corporation v. Aban, 702 SCRA 417 (2013), the Court held that if the insured dies within the two-
year contestability period, the insurer is bound to make good its obligation under the policy, regardless of the presence or lack of
concealment or misrepresentation. The Court held: Section 48 serves a noble purpose, as it regulates the actions of both the insurer
and the insured. Under the provision, an insurer is given two years — from the effectivity of a life insurance contract and while the
insured is alive — to discover or prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or
misrepresentation of the insured or his agent. After the two-year period lapses, or when the insured dies within the period, the
insurer must make good on the policy, even though the policy was obtained by fraud, concealment, or misrepresentation . This
is not to say that insurance fraud must be rewarded, but that insurers who recklessly and indiscriminately solicit and obtain business
must be penalized, for such recklessness and lack of discrimination ultimately work to the detriment of  bona fide takers of insurance
and the public in general.
Same; Same; Burden of Proof; Concealment as a defense for the insurer to avoid liability is an affirmative defense and the duty
to establish such defense by satisfactory and convincing evidence rests upon the provider or insurer.—Indeed, the intent to defraud on
the part of the insured must be ascertained to merit rescission of the insurance contract. Concealment as a defense for the insurer to
avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the
provider or insurer. In the present case, Sun Life failed to clearly and satisfactorily establish its allegations, and is therefore liable to
pay the proceeds of the insurance.
Remedial Law; Courts; Supreme Court; Well-settled is the rule that this Court is not a trier of facts. —Well-settled is the rule
that this Court is not a trier of facts. Factual findings of the lower courts are entitled to great weight and respect on appeal, and in fact
accorded finality when supported by substantial evidence on the record.
 
 
47
VOL. 793, JUNE 8, 2016 47
Sun Life of Canada (Philippines), Inc. vs. Sibya
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
  Padlan, Salvador, Coloma & Associates for petitioner.
  Egargo, Puertollano, Gervacio & Garrido Law Officesfor respondents.

5
REYES, J.:
 
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision2 dated November 18, 2013 and Resolution3 dated February 13, 2014 of the Court of Appeals (CA) in C.A.-G.R. CV No.
93269. In both instances, the CA affirmed the Decision4 dated March 16, 2009 of the Regional Trial Court (RTC) of Makati City,
Branch 136, in Civil Case No. 01-1506, ordering petitioner Sun Life of Canada (Philippines), Inc. (Sun Life) t o pay Ma. Daisy S.
Sibya (Ma. Daisy), Jesus Manuel S. Sibya III, and Jaime Luis S. Sibya (respondents) the amounts of P1,000,000.00 as death benefits ,
P100,000.00 as moral damages, P100,000.00 as exemplary damages, and P100,000.00 as attorney’s fees and costs of suit. Insofar as
the charges for violation of Sections 241 and 242 of Presidential Decree No. 612, or the Insurance Code of the Philippines, however,
the CA modified the decision of the RTC and absolved Sun Life therein.
_______________

1  Rollo, pp. 33-54.

2  Penned by Associate Justice Nina G. Antonio-Valenzuela, with Associate Justices Isaias P. Dicdican and Michael P. Elbinias,
concurring; id., at pp. 6-18.
3  Id., at pp. 29-30.
4  Rendered by Acting Presiding Judge Rowena De Juan-Quinagoran; id., at pp. 84-88.
 
 
48
48 SUPREME COURT REPORTS ANNOTATED
Sun Life of Canada (Philippines), Inc. vs. Sibya
Statement of Facts of the Case
 
On January 10, 2001, Atty. Jesus Sibya, Jr. (Atty. Jesus Jr.) applied for life insurance with Sun Life. In his Application for
Insurance, he indicated that he had sought advice for kidney problems.5 Atty. Jesus Jr. indicated the following in his application:
 
“Last 1987, had undergone lithotripsy due to kidney stone under Dr. Jesus Benjamin Mendoza at National Kidney Institute,
discharged after 3 days, no recurrence as claimed.”6
 
On February 5, 2001, Sun Life approved Atty. Jesus Jr.’s application and issued Insurance Policy No. 031097335. The policy
indicated the respondents as beneficiaries and entitles them to a death benefit of P1,000,000.00 should Atty. Jesus Jr. dies on or before
February 5, 2021, or a sum of money if Atty. Jesus Jr. is still living on the endowment date.7
On May 11, 2001, Atty. Jesus Jr. died as a result of a gunshot wound in San Joaquin, Iloilo. As such, Ma. Daisy filed a Claimant’s
Statement with Sun Life to seek the death benefits indicated in his insurance policy.8
In a letter dated August 27, 2001, however, Sun Life denied the claim on the ground that the details on Atty. Jesus Jr.’s medical
history were not disclosed in his application. Simultaneously, Sun Life tendered a check representing the refund of the premiums paid
by Atty. Jesus Jr.9
The respondents reiterated their claim against Sun Life thru a letter dated September 17, 2001. Sun Life, however, refused to heed
the respondents’ requests and instead filed a
_______________

5  Id., at pp. 6-7.

6  Id., at p. 7.
7  Id.
8  Id.
9  Id.
 
 
49
VOL. 793, JUNE 8, 2016 49
Sun Life of Canada (Philippines), Inc. vs. Sibya
Complaint for Rescission before the RTC and prayed for judicial confirmation of Atty. Jesus Jr.’s rescission of insurance policy.10
In its Complaint, Sun Life alleged that Atty. Jesus Jr. did not disclose in his insurance application his previous medical treatment
at the National Kidney Transplant Institute in May and August of 1994. According to Sun Life, the undisclosed fact suggested that the
insured was in “renal failure” and at a high risk medical condition. Consequently, had it known such fact, it would not have issued the
insurance policy in favor of Atty. Jesus Jr.11
For their defense, the respondents claimed that Atty. Jesus Jr. did not commit misrepresentation in his application for insurance.
They averred that Atty. Jesus Jr. was in good faith when he signed the insurance application and even authorized Sun Life to inquire

6
further into his medical history for verification purposes. According to them, the complaint is just a ploy to avoid the payment of
insurance claims.12
 
Ruling of the RTC
 
On March 16, 2009, the RTC issued its Decision 13 dismissing the complaint for lack of merit. The RTC held that Sun Life violated
Sections 241, paragraph 1(b), (d), and (e)14 and
_______________

10  Id.
11  Id., at pp. 7-8.
12  Id., at p. 8.
13  Id., at pp. 84-88.
14  Sec. 241. (1) No insurance company doing business in the Philippines shall refuse, without just cause, to pay or settle
claims arising under coverages provided by its policies, nor shall any such company engage in unfair claim settlement practices. Any
of the following acts by an insurance company, if committed without just cause and performed with such frequency as to indicate a
general business practice, shall constitute unfair claim settlement practices:
x x x x
 
 
50
50 SUPREME COURT REPORTS ANNOTATED
Sun Life of Canada (Philippines), Inc. vs. Sibya
24215 of the Insurance Code when it refused to pay the rightful claim of the respondents. Moreover, the RTC ordered Sun Life to
pay the amounts of P1,000,000.00 as death benefits, P100,000.00 as moral damages, P100,000.00 as exemplary damages, and
P100,000.00 as attorney’s fees and costs of suit.
The RTC held that Atty. Jesus Jr. did not commit material concealment and misrepresentation when he applied for life insurance
with Sun Life. It observed that given the disclosures and the waiver and authorization to investigate exe-
_______________

(b) failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its
policies;
x x x x
(d) not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has
become reasonably clear; or
(e) compelling policyholders to institute suits to recover amounts due under its policies by offering without justifiable reason
substantially less than the amounts ultimately recovered in suits brought by them.
x x x x
15  Sec. 242. The proceeds of a life insurance policy shall be paid immediately upon maturity of the policy, unless such
proceeds are made payable in installments or as an annuity, in which case the installments, or annuities shall be paid as they become
due: Provided, however, That in the case of a policy maturing by the death of the insured, the proceeds thereof shall be paid within
sixty days after presentation of the claim and filing of the proof of the death of the insured. Refusal or failure to pay the claim within
the time prescribed herein will entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at
the rate of twice the ceiling prescribed by the Monetary Board, unless such failure or refusal to pay is based on the ground that the
claim is fraudulent.
The proceeds of the policy maturing by the death of the insured payable to the beneficiary shall include the discounted value of all
premiums paid in advance of their due dates, but are not due and payable at maturity.
 
 
51
VOL. 793, JUNE 8, 2016 51
Sun Life of Canada (Philippines), Inc. vs. Sibya
cuted by Atty. Jesus Jr. to Sun Life, the latter had all the means of ascertaining the facts allegedly concealed by the applicant. 16
Aggrieved, Sun Life elevated the case to the CA.
 
Ruling of the CA
 

7
 On appeal, the CA issued its Decision17 dated November 18, 2013 affirming the RTC decision in ordering Sun Life to pay death
benefits and damages in favor of the respondents. The CA, however, modified the RTC decision by absolving Sun Life from the
charges of violation of Sections 241 and 242 of the Insurance Code.18
The CA ruled that the evidence on records show that there was no fraudulent intent on the part of Atty. Jesus Jr. in submitting his
insurance application. Instead, it found that Atty. Jesus Jr. admitted in his application that he had sought medical treatment for kidney
ailment.19
Sun Life filed a Motion for Partial Reconsideration 20 dated December 11, 2013 but the same was denied in a Resolution 21 dated
February 13, 2014.
Undaunted, Sun Life filed an appeal by way of petition for review on certiorari under Rule 45 of the Rules of Court before this
Court.
 
The Issue
 
Essentially, the main issue of the instant case is whether or not the CA erred when it affirmed the RTC decision finding
_______________

16  Rollo, p. 86.
17  Id., at pp. 6-18.
18  Id., at p. 17.
19  Id., at p. 14.
20  Id., at pp. 19-28.
21  Id., at pp. 29-30.
 
 
52
52 SUPREME COURT REPORTS ANNOTATED
Sun Life of Canada (Philippines), Inc. vs. Sibya
that there was no concealment or misrepresentation when Atty. Jesus Jr. submitted his insurance application with Sun Life.
 
Ruling of the Court
 
The petition has no merit.
In Manila Bankers Life Insurance Corporation v. Aban,22 the Court held that if the insured dies within the two-year contestability
period, the insurer is bound to make good its obligation under the policy, regardless of the presence or lack of concealment or
misrepresentation. The Court held:
 
Section 48 serves a noble purpose, as it regulates the actions of both the insurer and the insured. Under the provision, an
insurer is given two years — from the effectivity of a life insurance contract and while the insured is alive — to discover or
prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the
insured or his agent. After the two-year period lapses, or when the insured dies within the period, the insurer must make
good on the policy, even though the policy was obtained by fraud, concealment, or misrepresentation. This is not to say
that insurance fraud must be rewarded, but that insurers who recklessly and indiscriminately solicit and obtain business must
be penalized, for such recklessness and lack of discrimination ultimately work to the detriment of bona fide takers of insurance
and the public in general.23 (Emphasis ours)

In the present case, Sun Life issued Atty. Jesus Jr.’s policy on February 5, 2001. Thus, it has two years from its issuance, to
investigate and verify whether the policy was obtained by fraud, concealment, or misrepresentation. Upon the death of
_______________

22  715 Phil. 404; 702 SCRA 417 (2013).

23  Id., at p. 415; p. 427.
 
 
53
VOL. 793, JUNE 8, 2016 53
Sun Life of Canada (Philippines), Inc. vs. Sibya

8
 Atty. Jesus Jr., however, on May 11, 2001, or a mere three months from the issuance of the policy, Sun Life loses its right to
rescind the policy. As discussed in Manila Bankers, the death of the insured within the two-year period will render the right of the
insurer to rescind the policy nugatory. As such, the incontestability period will now set in.
Assuming, however, for the sake of argument, that the incontestability period has not yet set in, the Court agrees, nonetheless, with
the CA when it held that Sun Life failed to show that Atty. Jesus Jr. committed concealment and misrepresentation.
As correctly observed by the CA, Atty. Jesus Jr. admitted in his application his medical treatment for kidney ailment. Moreover,
he executed an authorization in favor of Sun Life to conduct investigation in reference with his medical history. The decision in part
states:
 
Records show that in the Application for Insurance, [Atty. Jesus Jr.] admitted that he had sought medical treatment for
kidney ailment. When asked to provide details on the said medication, [Atty. Jesus Jr.] indicated the following information:
year (“1987”), medical procedure (“undergone lithotripsy due to kidney stone”), length of confinement (“3 days”), attending
physician (“Dr. Jesus Benjamin Mendoza”) and the hospital (“National Kidney Institute”).
It appears that [Atty. Jesus Jr.] also signed the Authorization which gave [Sun Life] the opportunity to obtain information
on the facts disclosed by [Atty. Jesus Jr.] in his insurance application. x x x
x x x x
Given the express language of the Authorization, it cannot be said that [Atty. Jesus Jr.] concealed his medical history since
[Sun Life] had the means of ascertaining [Atty. Jesus Jr.’s] medical record.
With regard to allegations of misrepresentation, we note that [Atty. Jesus Jr.] was not a medical doctor, and
 
 
54
54 SUPREME COURT REPORTS ANNOTATED
Sun Life of Canada (Philippines), Inc. vs. Sibya
his answer “no recurrence” may be construed as an honest opinion. Where matters of opinion or judgment are called for,
answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue. 24 (Citations
omitted and italics in the original)
 
Indeed, the intent to defraud on the part of the insured must be ascertained to merit rescission of the insurance contract.
Concealment as a defense for the insurer to avoid liability is an affirmative defense and the duty to establish such defense by
satisfactory and convincing evidence rests upon the provider or insurer. 25 In the present case, Sun Life failed to clearly and
satisfactorily establish its allegations, and is therefore liable to pay the proceeds of the insurance.
Moreover, well-settled is the rule that this Court is not a trier of facts. Factual findings of the lower courts are entitled to great
weight and respect on appeal, and in fact accorded finality when supported by substantial evidence on the record. 26
WHEREFORE, the petition for review is DENIED. The Decision dated November 18, 2013 and Resolution dated February 13,
2014 of the Court of Appeals in C.A.-G.R. CV No. 93269 are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson) and Perez, JJ., concur.
Peralta and Jardeleza, JJ., On Official Leave.
Petition denied, judgment and resolution affirmed.
_______________

24  Rollo, pp. 14-15.

25  Philamcare Health Systems, Inc. v. Court of Appeals, 429 Phil. 82, 92; 379 SCRA 356, 365 (2002).
26  Bernales v. Heirs of Julian Sambaan, 624 Phil. 88, 97; 610 SCRA 90, 99 (2010).
 
 
55
VOL. 793, JUNE 8, 2016 55
Sun Life of Canada (Philippines), Inc. vs. Sibya
Notes.—Manuel had been taking medicine for his heart condition and diabetes when he submitted his pension plan application;
Pursuant to Section 27 of the Insurance Code, Manuel’s concealment entitles Philam Plans to rescind its contract of insurance with
him. (Florendo vs. Philam Plans, Inc., 666 SCRA 618 [2012])
An incontestability clause precludes the insurer from disowning liability under the policy it issued on the ground of concealment
or misrepresentation. (Id.)
 
 
——o0o——

9
G.R. No. 105135. June 22, 1995.*
SUNLIFE ASSURANCE COMPANY OF CANADA, petitioner, vs. The Hon. COURT OF APPEALS and Spouses ROLANDO
and BERNARDA BACANI, respondents.
Evidence; The rule that factual findings of the lower court and the appellate court are binding on the Supreme Court is not
absolute.—The rule that factual findings of the lower court and the appellate court are binding on this Court is not absolute and admits

10
of exceptions, such as when the judgment is based on a misappreciation of the facts (Geronimo v. Court of Appeals, 224 SCRA 494
[1993]).
Insurance Law; Concealment; Words and Phrases; A neglect to communicate that which a party knows and ought to
communicate is called concealment.—In weighing the evidence presented, the trial court concluded that indeed there was concealment
and misrepresenta-
______________
*
 FIRST DIVISION.
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VOL. 245, JUNE 22, 1995  269 
Sunlife Assurance Company of Canada vs. Court of Appeals
tion, however, the same was made in “good faith” and the facts concealed or misrepresented were irrelevant since the policy was
“non-medical.” We disagree. Section 26 of 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. Said Section provides: “A neglect to communicate that which a party
knows and ought to communicate, is called concealment.”
Same; Same; Materiality; Matters relating to the health of the insured are material and relevant to the approval and issuance
of the life insurance policy as these definitely affect the insurer’s action on the applicatio n.—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 were 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.
Same; Same; Good faith is no defense in concealment.—Thus, “good 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 bona fides. It appears that such concealment was deliberate on his part.
Same; Same; Non-Medical Insurance Contracts; The waiver of a medical examination in a non-medical insurance contract
renders even more material the information required of the applicant concerning previous condition of health and diseases suffered.
—The argument, that petitioner’s waiver of the medical examination of the insured debunks the materiality of the facts concealed, is
untenable. We reiterate our ruling in Saturnino v. Philippine American Life Insurance Company, 7 SCRA 316 (1963), that “x x x the
waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the
applicant concerning previous condition of health and diseases suffered, for such information necessarily constitutes an important
factor which the insurer takes into consideration in deciding whether to issue the policy or not x x x.”
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Sunlife Assurance Company of Canada vs. Court of Appeals
Same; Same; It is well-settled that the insured need not die of the disease he had failed to disclose to the insurer, as it is
sufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making
inquiries.—Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that the
insured need not die of the disease he had failed to disclose to the insurer. It is sufficient that his non-disclosure misled the insurer in
forming his estimates of the risks of the proposed insurance policy or in making inquiries (Henson v. The Philippine American Life
Insurance Co., 56. O.G. No. 48 [1960]).

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

     Quasha, Asperilla, Ancheta, Peña and Nolasco for petitioner.
     Edilberto Balce for private respondent.

QUIASON, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and set aside the Decision dated
February 21, 1992 of the Court of Appeals in CA-G.R. CV No. 29068, and its Resolution dated April 22, 1992, denying
reconsideration thereof.
We grant the petition.
I
On April 15, 1986, Robert John B. Bacani procured a life insurance contract for himself from petitioner. He was issued Policy No. 3-
903-766-X valued at P100,000.00, with double indemnity in case of accidental death. The designated beneficiary was his mother,
respondent Bernarda Bacani.
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 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. 
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VOL. 245, JUNE 22, 1995  271 
Sunlife Assurance Company of Canada vs. Court of Appeals
In its letter, 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. A check representing the total premiums paid in the amount of
P10,172.00 was attached to said letter.
Petitioner claimed that the insured gave false statements in his application when he answered the following questions:
“5. Within the past 5 years have you:

1. a)consulted any doctor or other health practitioner?

2. b)submitted to:

     ECG?
     X-rays?
     blood tests?
     other tests?

1. c)attended or been admitted to any hospital or other medical facility?

“6. Have you ever had or sought advice for:

xxx      xxx      xxx

1. b)urine, kidney or bladder disorder?”

(Rollo, p. 53).
The deceased answered question No. 5(a) in the affirmative but limited his answer to a consultation with a certain Dr. Reinaldo D.
Raymundo of the Chinese General Hospital on February 1986, for cough and flu complications. The other questions were answered in
the negative (Rollo, p. 53).
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. During his confinement, the deceased was subjected to urinalysis,
ultra-sonography and hematology tests.
On November 17, 1988, respondent Bernarda Bacani and her husband, respondent Rolando Bacani, filed an action for specific
performance against petitioner with the Regional Trial Court, Branch 191, Valenzuela, Metro Manila. Petitioner filed its answer with
counterclaim and a list of exhibits consisting of medical records furnished by the Lung Center of the Philippines.
On January 14, 1990, private respondents filed a “Proposed Stipulation with Prayer for Summary Judgment” where they 
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272  SUPREME COURT REPORTS ANNOTATED 
Sunlife Assurance Company of Canada vs. Court of Appeals
evidence of concealment/misrepresentation by the decedent of his health condition” (Rollo, p. 62).
Petitioner filed its Request for Admissions relative to the authenticity and due execution of several documents as well as
allegations regarding the health of the insured. Private respondents failed to oppose said request or reply thereto, thereby rendering an
admission of the matters alleged.
Petitioner then moved for a summary judgment and the trial court decided in favor of private respondents. The dispositive portion
of the decision is reproduced as follows:
“WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant, condemning the latter to pay the
former the amount of One Hundred Thousand Pesos (P100,000.00) the face value of insured’s Insurance Policy No. 3903766, and the
Accidental Death Benefit in the amount of One Hundred Thousand Pesos (P100,000.00) and further sum of P5,000.00 in the concept
of reasonable attorney’s fees and costs of suit.
“Defendant’s counterclaim is hereby Dismissed” (Rollo, pp. 43-44).
In ruling for private respondents, 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.”
Petitioner appealed to the Court of Appeals, which affirmed the decision of the trial court. 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

12
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” (Rollo, pp. 4-5).
Petitioner’s motion for reconsideration was denied; hence, this petition. 
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VOL. 245, JUNE 22, 1995  273 
Sunlife Assurance Company of Canada vs. Court of Appeals
II
We reverse the decision of the Court of Appeals. The rule that factual findings of the lower court and the appellate court are binding
on this Court is not absolute and admits of exceptions, such as when the judgment is based on a misappreciation of the facts
(Geronimo v. Court of Appeals, 224 SCRA 494 [1993]).
In weighing the evidence presented, the trial court concluded that indeed there was concealment and misrepresentation, however,
the same was made in “good faith” and the facts concealed or misrepresented were irrelevant since the policy was “non-medical.” We
disagree.
Section 26 of 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. Said Section provides:
“A neglect to communicate that which a party knows and ought to communicate, is called concealment.”
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
Insurance Code, Sec. 31).
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 were 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.
In Vda. de Canilang v. Court of Appeals, 223 SCRA 443(1993), we held that materiality of the information withheld does not
depend on the state of mind of the insured. Neither does it 
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274  SUPREME COURT REPORTS ANNOTATED 
Sunlife Assurance Company of Canada vs. Court of Appeals
depend on the actual or physical events which ensue.
Thus, “good 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 bona fides. It appears that such concealment was deliberate
on his part.
The argument, that petitioner’s waiver of the medical examination of the insured debunks the materiality of the facts concealed, is
untenable. We reiterate our ruling in Saturnino v. Philippine American Life Insurance Company, 7 SCRA 316 (1963), that “x x x the
waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the
applicant concerning previous condition of health and diseases suffered, for such information necessarily constitutes an important
factor which the insurer takes into consideration in deciding whether to issue the policy or not x x x.”
Moreover, such argument of private respondents would make Section 27 of the Insurance Code, which allows the injured party to
rescind a contract of insurance where there is concealment, ineffective (See Vda. de Canilang v. Court of Appeals, supra).
Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that the insured need
not die of the disease he had failed to disclose to the insurer. It is sufficient that his non-disclosure misled the insurer in forming his
estimates of the risks of the proposed insurance policy or in making inquiries (Henson v. The Philippine American Life Insurance Co.,
56 O.G. No. 48 [1960]).
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.
WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals is REVERSED and SET ASIDE.
SO ORDERED.
     Padilla (Chairman), Davide, Jr., Bellosillo and Kapunan, JJ., concur.
275
VOL. 245, JUNE 22, 1995  275 
People vs. Canturia
Petition granted, assailed judgment reversed and set aside.
Notes.—The terms of the contract constitute the measure of the insurer’s liability. (Paramount Insurance Corporation vs.
Japson, 211 SCRA 879 [1992])
As it is also a contract of adhesion, an insurance contract should be liberally construed in favor of the insured and strictly against
the insurance company. (Verendia vs. Court of Appeals, 217 SCRA 417 [1993])
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