ARGENTE vs. WEST COAST LIFE CO. Have you consulted any physician in the last 5 years?
No
J. Malcolm | March 19, 1928
TOPIC: CASES ON CONCEALMENT AND MISREPRESENTATION
FACTS
(1) Bernardo Argente signed an application for joint insurance with his wife in the
sum of 2,000.
(2) Pursuant to his application, the spouses were examined by Dr. Sta. Ana of West
Coast. The result was recorded in the Medical Examiner’s Report. All answers to
the medical questions were provided by the spouses.
(3) On May 9, 1925, the spouses increased the amount of their policy to 15,000.
(4) A temporary policy for 15,000 was issued to the spouses but it was not delivered
to Argente until July 2, 1925, when the first quarterly premium on the policy was
paid. As it has been more than 30 days since they were examined by West
Coast’s physician, they were required to file a certificate of health before the
policy was delivered to them.
(5) The wife died of cerebral apoplexy. Thereafter, Argente presented a claim for the
payment of 15,000, the amount of the joint life insurance policy.
(6) Following an investigation by the Manila office Manager, it appears that the
answers given by the spouses in their medical examinations with regards their
health were untrue.
(7) As such, West Coast refused to pay the claim and wrote Argente to the effect
that the claim was rejected because the insurance was obtained through fraud
and misrepresentation.
Argent provided the following answers:
Have you ever suffered from any ailment of the brain? No
Have you consulted any physician for any other disease? Yes, for
Scabies.
Have you consulted any other physicians not named above within the No
last 5 years and for what illness?
However, it appears that last Jan. 10-13, 1923, Argente was confined in the PGH
where he was treated by Dr. Sison for cerebral congestion and Bell’s Palsy.
While the wife answered the following:
How frequently do you drink intoxicants? Beer, small
quantities
occasionally
Have you suffered from any ailment of the brain? No
Are you in good health as far as you know and believe? Yes
It appears however that the wife was taken by a patrolman, at the husband’s request,
on May 19, 1924, to San Lazaro Hospital where she was diagnosed with probable
“manic-depressive psychosis,” and later in Mary Chiles Hospital, of “psycho-neurosis”
(8) Argente alleges that they revealed their previous illnesses and hospitalization to
Dr. Sta. Ana. but that the Dr., presumably acting in collusion with the insurance
agent, failed to record them in the medical reports.
(9) The CFI found that the spouses knowingly supplied false information with respect
to the state of their health.
ISSUE: WON the insurance must be rescinded due to concealment – YES
RATIO
 Concealment is a ground for the rescission of a contract of insurance under the
Insurance Act. In Sec. 25, concealment is defined as “a neglect to communicate
that which a party knows and ought to communicate.”
 The SC held that if the policy was procured by fraudulent representations, the
contract of insurance was never legally existent.
 The SC cited “Joyce, The Law of Insurance”:
o Concealment exists where the assured has knowledge of a fact material to
the risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assured, but he designated and intentionally withholds
the same.
o If the assured undertakes to state all the circumstances affecting the risk, a
full and fair statement of all is required.
o The concealment must not only be material but fraudulent or the fact that it
was intentionally withheld.
 Argente contends that even if West Coast had a right to rescind their contract,
such right cannot now be enforced in view of Sec. 47 of the Insurance Act which
provides that “whenever a right to rescind a contract of insurance is given to their
insurer by provision of this chapter, such right must be exercised previous to the
commencement of an action on the contract.”
o However, it appears than 1 month prior to this action, West Coast already
informed Argente that the contract was void. As held in California, the
insurer’s notice that the policy is voided before the commencement of suit
operates to rescind the contract of insurance.
DISPOSITIVE CFI AFFIRMED