INSURANCE LAW NOTES
P.D. 612 as amended by R.A. 10607
Based on the Syllabus of Atty. Sagmit
CONCEALMENT IN MARINE INSURANCE In Industrial Life Insurance:
A provision that the policy shall be incontestable
Section 112: after it has been in force during the lifetime of the
A concealment in a marine insurance, in respect to any of insured for a specified period, not more than two (2)
the following matters, does not vitiate the entire contract, years from its date of issue, except for nonpayment
of premiums and except for violation of the
Effect: but merely exonerates the insurer from a loss conditions of the policy relating to naval or military
resulting from the risk concealed: service, or services auxiliary thereto, and except as
to provisions relating to benefits in the event of
a) The national character of the insured;
disability as defined in the policy, and those
b) The liability of the thing insured to capture and
granting additional insurance specifically against
detention;
death by accident or by accidental means, or to
c) The liability to seizure from breach of foreign laws
additional insurance against loss of, or loss of use
of trade;
of, specific members of the body (Sec. 236 par. B)
d) The want of necessary documents; and
e) The use of false and simulated papers. Tan vs CA
Section 113 The so-called "incontestability clause" precludes the insurer
from raising the defenses of false representations or
Situation: If a representation by a person insured concealment of material facts insofar as health and previous
by a contract of marine insurance, is intentionally diseases are concerned if the insurance has been in force
false in any material respect, or in respect of any for at least two years during the insured's lifetime. The
fact on which the character and nature of the risk phrase "during the lifetime" found in Section 48 simply
depends means that the policy is no longer considered in force after
the insured has died. The key phrase in the second
Effect: the insurer may rescind the entire contract. paragraph of Section 48 is "for a period of two years."
NOTE: The eventual falsity of a representation as to
expectation does not, in the absence of fraud, avoid a
contract of marine insurance (Sec 114) Sunlife vs Bacani
We, therefore, rule that petitioner properly exercised its right
to rescind the contract of insurance by reason of the
CONCEALMENT IN LIFE INSURANCE 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
Incontestability Clause: Insurance Code.
After a policy of life insurance made payable on the
death of the insured shall have been in force during
Manila Bankers vs Aban
the lifetime of the insured for a period of two (2)
The Court therefore agrees fully with the appellate court's
years from the date of its issue or of its last
pronouncement that the "incontestability clause" is a
reinstatement, the insurer cannot prove that the
provision in law that after a policy of life insurance made
policy is void ab initio or is rescindable by reason of
payable on the death of the insured shall have been in force
the fraudulent concealment or misrepresentation of
during the lifetime of the insured for a period of two (2) years
the insured or his agent (Section 48 par. B)
from the date of its issue or of its last reinstatement, the
insurer cannot prove that the policy is void ab initio or is
In Individual Life (Endowment Insurance)
rescindible by reason of fraudulent concealment or
misrepresentation of the insured or his agent.
A provision that the policy shall be incontestable
after it shall have been in force during the lifetime of
The purpose of the law is to give protection to the insured or
the insured for a period of two (2) years from its
his beneficiary by limiting the rescinding of the contract of
date of issue as shown in the policy, or date of
insurance on the ground of fraudulent concealment or
approval of last reinstatement, except for
misrepresentation to a period of only two (2) years from the
nonpayment of premium and except for violation of
issuance of the policy or its last reinstatement.
the conditions of the policy relating to military or
naval service in time of war (Sec. 233 par. B)
In Group Insurance Sunlife vs Sibya
Assuming, however, for the sake of argument, that the
A provision that the validity of the policy shall not be incontestability period has not yet set in, the Court agrees,
contested, except for nonpayment of premiums nonetheless, with the CA when it held that Sun Life failed to
after it has been in force for two (2) years from its show that Atty. Jesus Jr. committed concealment and
date of issue; and that no statement made by any misrepresentation.
insured under the policy relating to his insurability
shall be used in contesting the validity of the As correctly observed by the CA, Atty. Jesus Jr. admitted in
insurance with respect to which such statement was his application his medical treatment for kidney ailment.
made after such insurance has been in force prior Moreover, he executed an authorization in favor of Sun Life
to the contest for a period of two (2) years during to conduct investigation in reference with his medical
such person’s lifetime nor unless contained in a history.
written instrument signed by him (Sec. 234 par. B)
[AUTHOR NAME] 1
INSURANCE LAW NOTES
P.D. 612 as amended by R.A. 10607
Based on the Syllabus of Atty. Sagmit
MISREPRESENTATION
Saturnino vs Philam
In General: Moreover, if it were the law that an insurance company could
not depend a policy on the ground of misrepresentation,
FORM: May be oral or written (Sec. 36) unless it could show actual knowledge on the part of the
When may be made? (Sec. 37) applicant that the statements were false, then it is plain that it
would be impossible for it to protect itself and its honest
A representation may be made at the time of, or policyholders against fraudulent and improper claims. It
before, issuance of the policy. would be wholly at the mercy of any one who wished to
apply for insurance, as it would be impossible to show actual
Interpretation: The language of a representation is to be
fraud except in the extremest cases. It could not rely on an
interpreted by the same rules as the language of contracts in
application as containing information on which it could act.
general (Sec. 39)
There would be no incentive to an applicant to tell the truth.
NOTE:
A representation as to the future is to be deemed a
promise, unless it appears that it was merely a
As a Ground to Rescind (Sec. 45)
statement of belief or expectation (Sec. 39)
A representation cannot qualify an express
Situation: If a representation is false in a material
provision in a contract of insurance, but it may
point, whether affirmative or promissory
qualify an implied warranty (Sec. 40)
A representation may be altered or withdrawn Effect: The injured party is entitled to rescind the
before the insurance is effected, but not afterwards contract from the time when the representation
(Sec. 41) becomes false.
A representation must be presumed to refer to the
NOTE: Whenever a right to rescind a contract of
date on which the contract goes into effect (Sec.
insurance is given to the insurer by any provision of
43)
this chapter, such right must be exercised previous
Section 43: to the commencement of an action on the contract
(Sec. 48)
Situation: When a person insured has no personal
knowledge of a fact CASES:
He may nevertheless repeat information which he Ng Gan Zee vs Asian
has upon the subject, and which he believes to be
true, with the explanation that he does so on the Sec. 27 of the Insurance Law, above-quoted, nevertheless
information of others; or he may submit the requires that fraudulent intent on the part of the insured be
information, in its whole extent, to the insurer; and established to entitle the insurer to rescind the contract. And
in neither case is he responsible for its truth, unless as correctly observed by the lower court, "misrepresentation
it proceeds from an agent of the insured, whose as a defense of the insurer to avoid liability is an 'affirmative'
duty it is to give the information. defense. The duty to establish such a defense by
satisfactory and convincing evidence rests upon the
CASES: defendant. The evidence before the Court does not clearly
and satisfactorily establish that defense.
Eguaras vs Great Eastern
The supposition that Dominador Albay was not ill in October,
United vs Country Bankers
1912, would not explain why he did not present himself in
person to be examined by the physician Vidal; and when he It has long been settled that a false and material statement
failed to do so and by agreement with the agent Remegio made with an intent to deceive or defraud voids an insurance
was willing to be substituted by Castor Garcia to the end that policy.
in any event no defect or personal quality should be
discovered to hinder the perfecting of the insurance contract,
such a change in the person constitutes one of the means of Benguet vs CA
fraud which, although it may not partake of the nature of a Resultingly, the admissions elicited from appellants
crime, essentially nullifies the insurance contract executed. witnesses that they could not confirm the accuracy of the
figures indicated in their documentary evidence with regard
Argente vs West Coast to the actual weight of the cargo loaded at the port of origin
and that unloaded at the port of destination, in effect rebuts
It is also held that the concealment must, in the absence of the presumption in favor of the figure indicated in the bill of
inquiries, be not only material, but fraudulent, or the fact lading
must have been intentionally withheld; so it is held under
English law that if no inquiries are made and no fraud or
design to conceal enters into the concealment the contract is Test of Falsity:
not avoided. And it is determined that even though silence
may constitute misrepresentation or concealment it is not A representation is to be deemed false when the
itself necessarily so as it is a question of fact. Nor is there a facts fail to correspond with its assertions or
concealment justifying a forfeiture where the fact of insanity stipulations (Sec. 44)
is not disclosed no questions being asked concerning the Materiality:
same
[AUTHOR NAME] 2
INSURANCE LAW NOTES
P.D. 612 as amended by R.A. 10607
Based on the Syllabus of Atty. Sagmit
The materiality of a representation is determined by
the same rules as the materiality of a concealment
(Sec. 46)
[AUTHOR NAME] 3
