Ng Gan Zee v. Asian Crusader Life Assurance Corporation
REITERATIONFacts
The Antecedents: Plaintiff-appellee Ng Gan Zee, as beneficiary, filed a complaint against defendant-appellant Asian Crusader Life Assurance Corporation for the payment of the face value of a P20,000.00 insurance policy issued on the life of her deceased husband, Kwong Nam. The insured died of cancer of the liver with metastasis on December 6, 1963, with all premiums paid. The insurer denied the claim, alleging misrepresentation and concealment of material facts by the insured in his application. Procedural History: The Court of First Instance of Manila ruled in favor of the appellee, ordering the appellant to pay the face value of the policy with interest and costs. The Court of Appeals certified the case to the Supreme Court as it involved solely a question of law. The Petition: The appellant contended that the insured misrepresented his insurance history by answering 'No' to a question about whether any life insurance company had ever refused his application or reinstatement, when he had applied for reinstatement with Insular Life Assurance Co., Ltd. in January 1962. Appellant also alleged that the insured misrepresented his medical history regarding a stomach tumor operation, stating it was a tumor of 'hen's egg size' associated with an ulcer, when medical reports indicated an operation for 'peptic ulcer' involving a portion of the stomach.
Issue(s)
Whether the insured committed misrepresentation by answering 'No' to the question regarding previous refusal of insurance or reinstatement. Whether the insured committed material concealment regarding his past operation for a stomach ailment.
Ruling
The Supreme Court affirmed the judgment of the lower court, ordering the appellant to pay the face value of the insurance policy. The Court found no reversible error in the trial court's decision.
Ratio Decidendi
On the issue of misrepresentation regarding previous insurance refusal: The Court held that the insured did not misrepresent his insurance history. The application with Insular Life Assurance Co., Ltd. was for the reinstatement and amendment of a lapsed policy, not an application for a new insurance policy. Furthermore, Insular Life Assurance Co., Ltd. approved the application for reinstatement on April 24, 1962, prior to the insured's answer on May 12, 1962. Therefore, there was no refusal of an application for insurance or reinstatement at the time the question was answered, rendering the answer 'No' truthful. On the issue of material concealment regarding the past operation: The Court ruled that the insured's statement about the operation for a stomach tumor associated with an ulcer, described as 'hen's egg size,' did not constitute material concealment that would allow the insurer to rescind the contract. Section 27 of the Insurance Law requires fraudulent intent to be established for rescission. The Court found no clear and satisfactory evidence of such intent. The insured's statement was a good faith expression of his belief, and the insurer had the means to make further inquiries, as provided by Section 32 of the Insurance Law. The insurer's failure to do so, despite the information provided, constituted a waiver of the imperfection of the answer, making the omission to answer more fully immaterial. The Court noted the insurer's eagerness to accept the premium, making it inequitable to allow avoidance of liability.
Main Doctrine
An insurer seeking to rescind an insurance contract based on misrepresentation or concealment must establish fraudulent intent on the part of the insured with clear and satisfactory evidence. The insurer also waives any imperfection in the insured's answers if it fails to make further inquiries despite imperfectly answered questions or implied facts.