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RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION

G.R.No.92492June17,1993
THELMAVDA.DECANILANG,petitioner,
vs.
HON.COURTOFAPPEALSandGREATPACIFICLIFEASSURANCECORPORATION,respondents.
SimeonC.Satoforpetitioner.
FELICIANO,J.:
On18June1982,JaimeCanilangconsultedDr.WilfredoB.Claudioandwasdiagnosedassufferingfrom"sinus
tachycardia."Thedoctorprescribedthefollowingfrohim:Trazepam,atranquilizerandAptin,abetablockerdrug.
Mr. Canilang consulted the same doctor again on 3 August 1982 and this time was found to have "acute
bronchitis."
On next day, 4 August 1982, Jaime Canilang applied for a "nonmedical" insurance policy with respondent Great
Pacific Life Assurance Company ("Great Pacific") naming his wife, Thelma Canilang, as his beneficiary. 1 Jaime
CanilangwasissuedordinarylifeinsurancePolicyNo.345163,withthefacevalueofP19,700,effectiveasof9August1982.

On5August1983,JaimeCanilangdiedof"congestiveheartfailure,""anemia,"and"chronicanemia."2 Petitioner,
widowandbeneficiaryoftheinsured,filedaclaimwithGreatPacificwhichtheinsurerdeniedon5December1983uponthe
groundthattheinsuredhadconcealedmaterialinformationfromit.

PetitionerthenfiledacomplaintagainstGreatPacificwiththeInsuranceCommissionforrecoveryoftheinsurance
proceeds.DuringthehearingcalledbytheInsuranceCommissioner,petitionertestifiedthatshewasnotawareof
any serious illness suffered by her late husband3 and that, as far as she knew, her husband had died because of a
kidney disorder.4 A deposition given by Dr. Wilfredo Claudio was presented by petitioner. There Dr. Claudio stated that he
wasthefamilyphysicianofthedeceasedJaimeCanilang5andthathehadpreviouslytreatedhimfor"sinustachycardia" and
"acutebronchitis."6GreatPacificforitspartpresentedDr.EsperanzaQuismorio,aphysician
and a medical underwriter working for Great Pacific. 7 She testified that the deceased's insurance application had been
approved on the basis of his medical declaration.8 She explained that as a rule, medical examinations are required only in
cases where the applicant has indicated in his application for insurance coverage that he has previously undergone medical
consultationandhospitalization.9

In a decision dated 5 November 1985, Insurance Commissioner Armando Ansaldo ordered Great Pacific to pay
P19,700pluslegalinterestandP2,000.00asattorney'sfeesafterholdingthat:
1. the ailment of Jaime Canilang was not so serious that, even if it had been disclosed, it would not
haveaffectedGreatPacific'sdecisiontoinsurehim
2.GreatPacifichadwaiveditsrighttoinquireintothehealthconditionoftheapplicantbytheissuance
of the policy despite the lack of answers to "some of the pertinent questions" in the insurance
application
3.therewasnointentionalconcealmentonthepartoftheinsuredJaimeCanilangashehadthought
thathewasmerelysufferingfromaminorailmentandsimplecold10and
4. Batas Pambansa Blg. 847 which voids an insurance contract, whether or not concealment was
intentionallymade,wasnotapplicabletoCanilang'scaseasthatlawbecameeffectiveonlyon1June
1985.

On appeal by Great Pacific, the Court of Appeals reversed and set aside the decision of the Insurance
Commissioner and dismissed Thelma Canilang's complaint and Great Pacific's counterclaim. The Court of
Appealedfoundthattheuseoftheword"intentionally"bytheInsuranceCommissionerindefiningandresolvingthe
issue agreed upon by the parties at pretrial before the Insurance Commissioner was not supported by the
evidence that the issue agreed upon by the parties had been whether the deceased insured, Jaime Canilang,
madeamaterialconcealmentasthestateofhishealthatthetimeofthefilingofinsuranceapplication,justifying
respondent's denial of the claim. The Court of Appeals also found that the failure of Jaime Canilang to disclose
previous medical consultation and treatment constituted material information which should have been
communicatedtoGreatPacifictoenablethelattertomakeproperinquiries.TheCourtofAppealsfinallyheldthat
theNgGanZeecasewhichhadinvolvedmisrepresentationwasnotapplicableinrespectofthecaseatbarwhich
involvesconcealment.
PetitionerThelmaCanilangisnowbeforethisCourtonaPetitionforReviewonCertiorariallegingthat:
1....theHonorableCourtofAppeals,speakingwithduerespect,erredinnotholdingthattheissuein
thecaseagreeduponbetweenthepartiesbeforetheInsuranceCommissioniswhetherornotJaime
Canilang"intentionally"madematerialconcealmentinstatinghisstateofhealth
2. . . . at any rate, the nondisclosure of certain facts about his previous health conditions does not
amounttofraudandprivaterespondentisdeemedtohavewaivedinquirythereto.11
The medical declaration which was set out in the application for insurance executed by Jaime Canilang read as
follows:
MEDICALDECLARATION
Iherebydeclarethat:
(1) I have not been confined in any hospital, sanitarium or infirmary, nor receive any medical or
surgicaladvice/attentionwithinthelastfive(5)years.
(2)I have never been treated nor consulted a physician for a heart condition, high blood pressure,
cancer,diabetes,lung,kidney,stomachdisorder,oranyotherphysicalimpairment.
(3)Iam,tothebestofmyknowledge,ingoodhealth.
EXCEPTIONS:
________________________________________________________________________________
GENERALDECLARATION
I hereby declare that all the foregoing answers and statements are complete, true and correct. I
herebyagreethatiftherebeanyfraudormisrepresentationintheabovestatementsmaterialtothe
risk, the INSURANCE COMPANY upon discovery within two (2) years from the effective date of
insurance shall have the right to declare such insurance null and void. That the liabilities of the
Company under the said Policy/TA/Certificate shall accrue and begin only from the date of
commencement of risk stated in the Policy/TA/Certificate, provided that the first premium is paid and
the Policy/TA/Certificate is delivered to, and accepted by me in person, when I am in actual good
health.
SignedatManilahis4thdayofAugust,1992.
Illegible

SignatureofApplicant.12
We note that in addition to the negative statements made by Mr. Canilang in paragraph 1 and 2 of the medical
declaration, he failed to disclose in the appropriate space, under the caption "Exceptions," that he had twice
consulted Dr. Wilfredo B. Claudio who had found him to be suffering from "sinus tachycardia" and "acute
bronchitis."
TherelevantstatutoryprovisionsastheystoodatthetimeGreatPacificissuedthecontractofinsuranceandatthe
timeJaimeCanilangdied,aresetoutinP.D.No.1460,alsoknownastheInsuranceCodeof1978,whichwentinto
effecton11June1978.Theseprovisionsreadasfollows:
Sec. 26. A neglect to communicate that which a party knows andought to communicate, is called a
concealment.

xxxxxxxxx
Sec.28.Eachpartytoacontractofinsurancemustcommunicatetotheother,ingoodfaith,allfactors
within his knowledge which are material to the contract and as to which he makes no warranty, and
whichtheotherhasnotthemeansofascertaining.(Emphasissupplied)
Under the foregoing provisions, the information concealed must be information which the concealing party knew
and"oughtto[have]communicate[d],"thatistosay,informationwhichwas"materialtothecontract."Thetestof
materialityiscontainedinSection31oftheInsuranceCodeof1978whichreads:
Sec. 31. Materially is to be determined not by the event, but solelybythe probable and reasonable
influenceofthefactsuponthepartytowhomthecommunicationisdue,informinghisestimateofthe
disadvantagesoftheproposedcontract,orinmakinghisinquiries.(Emphasissupplied)
"Sinustachycardia"isconsideredpresent"whentheheartrateexceeds100beatsperminute."13The symptoms of
this condition include pounding in the chest and sometimes faintness and weakness of the person affected. The following
elaborationwasofferedbyGreatPacificandsetoutbytheCourtofAppealsinitsDecision:

Sinustachycardiaisdefinedassinusinitiatedheartratefasterthan100beatsperminute.(Harrison's
Principles of Internal Medicine, 8th ed. [1978], p. 1193.) It is, among others, a common reaction to
heart disease, including myocardial infarction, and heart failure per se. (Henry J.L. Marriot, M.D.,
Electrocardiography,6thed.,[1977],p.127.)ThemedicationprescribedbyDr.Claudiofortreatment
of Canilang's ailment on June 18, 1982, indicates the condition that said physician was trying to
manage.Thus,heprescribedTrazepam,(PhilippineIndexofMedicalSpecialties(PIMS),Vol.14,No.
3,Dec.1985,p.112)whichisantianxiety,anticonvulsant,musclerelaxantandAptin,(Idem,p.36)a
cardiac drug, for palpitations and nervous heart. Such treatment could have been a very material
information to the insurer in determining the action to be take on Canilang's application for life
insurancecoverage.14
WeagreewiththeCourtofAppealsthattheinformationwhichJaimeCanilangfailedtodisclosewasmaterialtothe
ability of Great Pacific to estimate the probable risk he presented as a subject of life insurance. Had Canilang
disclosed his visits to his doctor, the diagnosis made and medicines prescribed by such doctor, in the insurance
application, it may be reasonably assumed that Great Pacific would have made further inquiries and would have
probablyrefusedtoissueanonmedicalinsurancepolicyor,attheveryleast,requiredahigherpremiumforthe
samecoverage. 15 The materiality of the information withheld by Great Pacific did not depend upon the state of mind of
JaimeCanilang.Aman'sstateofmindorsubjectivebeliefisnotcapableofproofinourjudicialprocess,exceptthroughproof
of external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn. Neither does
materialitydependupontheactualorphysicaleventswhichensue.Materialityrelatesrathertothe"probableandreasonable
influenceofthefacts"uponthepartytowhomthecommunicationshouldhavebeenmade,inassessingtheriskinvolvedin
making or omitting to make further inquiries and in accepting the application for insurance that "probable and reasonable
influenceofthefacts"concealedmust,ofcourse,bedeterminedobjectively,bythejudgeultimately.

TheinsuranceGreatPacificappliedforwasa"nonmedical"insurancepolicy.InSaturnino v. PhilippineAmerican
LifeInsuranceCompany,16thisCourtheldthat:
...ifanything,thewaiverofmedicalexamination[inanonmedicalinsurancecontract]renderseven
more material the information required of the applicant concerning previous condition of health and
diseasessuffered, for such information necessarily constitutes an important factor which the insurer
takesintoconsiderationindecidingwhethertoissuethepolicyornot....17(Emphasissupplied)
The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain information to the
insurerwasnot"intentional"innature,forthereasonthatJaimeCanilangbelievedthathewassufferingfromminor
ailmentlikeacommoncold.Section27oftheInsuranceCodeof1978asitexistedfrom1974upto1985,thatis,
throughoutthetimerangematerialforpresentpurposes,providedthat:
Sec.27.Aconcealmententitlestheinjuredpartytorescindacontractofinsurance.
Theprecedingstatute,ActNo.2427,asitstoodfrom1914upto1974,hadprovided:
Sec. 26. A concealment, whether intentional or unintentional, entitles the injured party to rescind a
contractofinsurance.(Emphasissupplied)
Upontheotherhand,in1985,theInsuranceCodeof1978wasamendedby
B.P.Blg.874.ThissubsequentstatutemodifiedSection27oftheInsuranceCodeof1978soastoreadasfollows:
Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a
contractofinsurance.(Emphasissupplied)

TheunspokentheoryoftheInsuranceCommissionerappearstohavebeenthatbydeletingthephrase"intentional
orunintentional,"theInsuranceCodeof1978(priortoitsamendmentbyB.P.Blg.874)intendedtolimitthekindsof
concealmentwhichgeneratearighttorescindonthepartoftheinjuredpartyto"intentionalconcealments."This
argumentisnotpersuasive.Asasimplematterofgrammar,itmaybenotedthat"intentional"and"unintentional"
cancel each other out. The net result therefore of the phrase "whether intentional or unitentional" is precisely to
leave unqualified the term "concealment." Thus, Section 27 of the Insurance Code of 1978 is properly read as
referring to "any concealment" without regard to whether such concealment is intentional or unintentional. The
phrase "whether intentional or unintentional" was in fact superfluous. The deletion of the phrase "whether
intentional or unintentional" could not have had the effect of imposing an affirmative requirement that a
concealmentmustbeintentionalifitistoentitletheinjuredpartytorescindacontractofinsurance.Therestoration
in 1985 by B.P. Blg. 874 of the phrase "whether intentional or unintentional" merely underscored the fact that all
throughout(from1914to1985),thestatutedidnotrequireproofthatconcealmentmustbe"intentional"inorderto
authorizerescissionbytheinjuredparty.
In any case, in the case at bar, the nature of the facts not conveyed to the insurer was such that the failure to
communicatemusthavebeenintentionalratherthanmerelyinadvertent.ForJaimeCanilangcouldnothavebeen
unaware that his heart beat would at times rise to high and alarming levels and that he had consulted a doctor
twiceinthetwo(2)monthsbeforeapplyingfornonmedicalinsurance.Indeed,thelastmedicalconsultationtook
place just the day before the insurance application was filed. In all probability, Jaime Canilang went to visit his
doctorpreciselybecauseofthediscomfortandconcernbroughtaboutbyhisexperiencing"sinustachycardia."
We find it difficult to take seriously the argument that Great Pacific had waived inquiry into the concealment by
issuingtheinsurancepolicynotwithstandingCanilang'sfailuretosetoutanswerstosomeofthequestionsinthe
insurance application. Such failure precisely constituted concealment on the part of Canilang. Petitioner's
argument,ifaccepted,wouldobviouslyeraseSection27fromtheInsuranceCodeof1978.
ItremainsonlytonotethattheCourtofAppealsfindingthatthepartieshadnotagreed in the pretrial before the
Insurance Commission that the relevant issue was whether or not Jaime Canilang had intentionally concealed
materialinformationfromtheinsurer,wassupportedbytheevidenceofrecord,i.e.,thePretrialOrderitselfdated
17October1984andtheMinutesofthePretrialConferencedated15October1984,which"readilyshowsthatthe
word"intentional"doesnotappearinthestatementordefinitionoftheissueinthesaidOrderandMinutes."18
WHEREFORE,thePetitionforReviewisDENIEDforlackofmeritandtheDecisionoftheCourtofAppealsdated
16October1989inC.A.G.R.SPNo.08696isherebyAFFIRMED.Nopronouncementastothecosts.
SOORDERED.
Bidin,Davide,Jr.,RomeroandMelo,JJ.,concur.

#Footnotes
1Anonmedicalinsuranceisone"whichdoesawaywiththeusualmedicalexaminationbeforethe
policyisissued"Saturninov.PhilippineAmericanLifeInsuranceCompany,7SCRA316(1963).
2DeathCertificate,Records,p.211.
3TSN,18January1985,p.68March1985,p.5.
4Id.,p.9.
5Deposition,18July1985,p.4.
6Id.,p.5.
7TSN,7August1985,p.8.
8Id.,p.10.
9Id.,p.19.
10HeretheCommissionercitedNgGanZeev.AsianCrusaderLifeAssuranceCorporation,122
SCRA461(1983).
11Petitionp.5Rollo,p.1.
12AsquotedintheDecisionoftheCourtofAppeals,Rollo,pp.8182italicsintheoriginal.

13Harrison'sPrincipleofInternalMedicine(11thEd.,1978),p.926.Seealso:Dorland'sIllustrated
MedicalDictionary(24thEd.,1965),p.1503.
14AsquotedintheDecisionoftheCourtofAppeals,Rollo,pp.8485italicspartlysuppliedandpartly
intheoriginal.
15See,e.g.,YuPangCheng,etc.v.CourtofAppeals,105Phil.930(1959)GreatPacificLife
AssuranceCorporationv.Hon.CourtofAppeals,89SCRA543(1979).
167SCRA316(1963).
177SCRAat318.
18DecisionoftheCourtofAppeals,Rollo,p.40.
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