G.R. No. 41794 ; August 30, 1935
Segundina Musñgi, et al., plaintiffs-appellees, vs. West Coast Life Insurance Co., defendant-appellant.

FACTS

The plaintiffs, as beneficiaries, sued the defendant to recover the value of two life insurance policies issued to Arsenio T. Garcia. The policies were valid and subsisting at the time of the insured’s death. In his applications for both policies, the insured answered “None” to a question asking if he had consulted or been treated by any physician not named, and for what illness. After his death, the defendant discovered that before signing the applications, the insured had been repeatedly hospitalized and treated for various ailments, including peptic ulcer and incipient pulmonary tuberculosis, by a physician at the General Hospital. The defendant refused payment, alleging the policies were fraudulently obtained.

ISSUE

Whether the insured’s false answers in the insurance applications regarding his medical consultations and treatments constitute a material concealment that renders the insurance contracts void.

RULING

Yes. The Supreme Court reversed the appealed judgment and absolved the defendant from liability. The insured’s answers were false and fraudulent. The concealment of his prior hospitalizations and treatments for serious ailments was material, as the defendant would not have accepted the risk had the true facts been disclosed. Following the Insurance Act and general civil law on contracts, a contract requires a lawful consideration. A false consideration renders a contract void. The Court cited Argente vs. West Coast Life Insurance Co., where similar concealment and false statements were held to nullify an insurance policy. The policies, having been procured by fraudulent representations, were null and void from inception.

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