Musngi v.

West Coast Life

GR 41794
August 30, 1935

Topic: Statement of False Consideration

Facts: Plaintiffs Musngi and Garia filed a suit against West Coast Life to recover the value of the two
insurance policies applied for by Arsenio Garcia (the insured). In applying for the said insurance, the
insured was asked if he consulted a physician or practitioner, and if so, for what ailment or illness; he
answered None and No, respectively. These answers were one of the causes or considerations for the
issuance of the policies. Upon the death of the insured, the plaintiffs, as beneficiaries, demanded West
Coast to pay the value of the policies. However, West Coast found out that the insured had been treated
by a lady physician in the General Hospital in Manila for different ailments such as incipient pulmonary
tuberculosis, chronic bronchitis, and chronic suppurative pyelocystisis. It contended that the two policies
did not create any valid obligation because they were fraudulently obtained by the insured. The appealed
decision held that the health of the insured, before acceptance of his application and the issuance of the
policies, could neither be discussed nor questioned by the defendant company because three physicians
of the company examined the insured; however, all the physicians signified that the insured was in good
health. Nevertheless, the findings of the company physicians were nit the main cause for the issuance (or
non-issuance) of the policies.
Issues:
1.) W/N the statements of the insured regarding his health were false
2.) W/N such statements were the causes which induced the defendant company to issue the policies
Held/Ratio:
1.) Yes, the statements of the insured regarding his health were false because at the time of
application, he already knew that he had been suffering from ailments.
2.) Yes, such statements were the causes which induced the defendant company to issue the policies.
The concealment and false statements of the insured constituted fraud; the insurance company,
by reason of such statement, accepted the risk associated with the policy nut for which it could
have rejected. It was further held that the principal question must be whether the assurer (the
insurance company) was misled or deceived into entering a contract of obligation or in fixing the
premium of the insurance by withholding of material information or facts within the assureds
knowledge or presumed knowledge. Under Art. 1276 of the Civil Code, the statement of a false
consideration shall render the contract void. Such matter is not specifically provided for by the
Insurance Law, and so the general rules of the civil law regarding contracts (there being a life
insurance contract) shall apply. Thus, a valid cause or consideration is a requisite for a valid
insurance contract.