Dear PAO,
My aunt passed away due to brain cancer. Two years before she died, she obtained a life insurance policy. However, when her children filed a claim for the insurance proceeds, the insurance company denied the claim on the ground that my aunt had failed to disclose that she was suffering from a stomach ailment, which allegedly rendered the policy void. May my cousins still claim the proceeds of their mother’s life insurance policy despite her failure to disclose an ailment? Thank you.
Indigo
Dear Indigo,
In the recent case of Intestate Heirs of the Late Indalicio Monera vs. Manila Bankers Life Insurance Corporation and Meycauayan Rural Bank, Inc. (G.R. No. 246446, January 28, 2026), the Supreme Court, speaking through Honorable Associate Justice Japar B. Dimaampao, upheld the cancellation of a life insurance policy on account of the insured’s failure to disclose material information concerning his medical condition. The Supreme Court reiterated that proof of fraudulent intent is not necessary to warrant the rescission of an insurance contract on the ground of concealment.
Section 26 of Republic Act (RA) 10607, otherwise known as the Insurance Code of the Philippines, defines concealment as the neglect to communicate that which a party knows and ought to communicate. Corollary thereto, Section 27 of the same Code expressly provides that concealment, whether intentional or unintentional, entitles the injured party to rescind the contract of insurance.
In the above-mentioned case of Monera, the Supreme Court emphasized that the determination of concealment is governed by the test of materiality under Section 31 of the Insurance Code, which provides: “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 the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.” Accordingly, the materiality of an undisclosed fact must be assessed based on its probable and reasonable influence on the insurer’s decision to enter into the insurance contract, rather than on the eventual outcome of the insured event.
Similarly, in The Insular Life Assurance Co., Ltd. vs. The Heirs of Alvarez (G.R. No. 207526, October 3, 2018), the Supreme Court speaking through Honorable Associate Justice Marvic M.V.F. Leonen, held that proof of fraudulent intent is unnecessary to rescind an insurance contract on the ground of concealment. The Court explained that, under the statutory framework governing insurance contracts, the concealment of material facts is inherently fraudulent in character. As the Court observed, when a material fact is actually known to the insured, its concealment is itself indicative of fraud, such that concealment, regardless of the insured’s actual intent to defraud, is equivalent to a false representation.
Applying the Insurance Code and jurisprudence, the determination of whether your aunt’s insurance policy may be validly cancelled will depend on whether the information allegedly withheld constituted a material fact within the contemplation of the Insurance Code. This requires an examination of the nature of the undisclosed medical condition, the insured’s knowledge thereof, and the probable and reasonable influence of such information on the insurer’s assessment of the risk and its decision to issue the policy.
We hope that we were able to answer your queries. This advice is solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net
