Ng Gan Zee vs Asian Crusader Life Assurance Corporation

G.R. No. L-30685 – 122 SCRA 461 – Mercantile Law – Insurance Law – Concealment – Misrepresentation – Duty of Insurance Company to Make Inquiry

In May 1962, Kwong Nam applied for a 20-year endowment policy with Asian Crusader Life Assurance Corporation. Asian Crusader asked the following question:

Has any life insurance company ever refused your application for insurance or for reinstatement of a lapsed policy or offered you a policy different from that applied for? If, so, name company and date.

Kwong Nam answered “No” to the above question.

Kwong Nam was also examined by Asian Crusader’s medical examiner to whom he disclosed that he was once operated and a tumor was removed from his stomach and such was “associated with ulcer of the stomach.”

Kwong Nam’s application was approved. In May 1963, he died. His widow, Ng Gan Zee, filed an insurance claim but Asian Crusader refused her claim as it insisted that Kwong Nam concealed material facts from them when he was applying for the insurance; that he misrepresented the fact that he was actually denied application by Insular Life when he was renewing his application with them; that Kwong Nam was actually operated for peptic ulcer.

ISSUE: Whether or not Ng Gan Zee can collect the insurance claim.

HELD: Yes. Asian Crusader was not able to prove that Kwong Nam’s statement that Insular Life did not deny his insurance renewal with them is untrue. In fact, evidence showed that in April 1962, Insular Life approved Kwong Nam’s request of reinstatement only with the condition that Kwong Nam’s plan will be lowered from P50, to P20, considering his medical history.

Kwong Nam did not conceal anything from Asian Crusader. His statement that his operation, in which a tumor the size of a hen’s egg was removed from his stomach, was only “associated with ulcer of the stomach” and not peptic ulcer can be considered as an expression made in good faith of his belief as to the nature of his ailment and operation. Indeed, such statement must be presumed to have been made by him without knowledge of its incorrectness and without any deliberate intent on his part to mislead Asian Crusader.

While it may be conceded that, from the viewpoint of a medical expert, the information communicated was imperfect, the same was nevertheless sufficient to have induced Asian Crusader to make further inquiries about the ailment and operation of Kwong Nam. It has been held that where, upon the face of the application, a question appears to be not answered at all or to be imperfectly answered, and the insurers issue a policy without any further inquiry, they waive the imperfection of the answer and render the omission to answer more fully immaterial.

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