61.

NG GAN ZEE V ASIAN CRUSADER LIFE ASSURANCE CORPORATION (1983) Doctrine: Concealment exists where the assured had knowledge of a fact material to the risk, and honesty, good faith, and fair dealing requires that he should communicate it to the assurer, but he designedly and intentionally withholds the same. Moreover, where in the application a question does not appear to be answered or was imperfectly answered and insurer issues a policy without any further inquiry, they waive the imperfection of the answer and the omission to fully answer immaterial. Facts: 1. 2. 3. 4. 5. 6. In 1962, Kwong Nam applied for a 20-year endowment policy with Asian Crusader for the sum of P20,000 with his wife Ng Gan Zee as the beneficiary. Upon payment of premium, the application was approved by Asian Crusader and the policy was issued. Dec 1963, Kwong Nam died of cancer of the liver with metastasis. All premiums were already paid. Wife filed claim of benefits against Asian Crusader and showed proof of death. Asian Crusader refused on the ground that answers given by Kwong Nam in his application were untrue. Insurance Commissioner Mandamus found that there was no material concealment thus beneficiary must receive full face value of the policy. Asian Crusader still refused. CFI ruled that there was no concealment (SC affirmed and cited ruling of CFI) Asian Crusader cites the following as misrepresentations on the part of the applicant: a. When he answered No to the 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 Considering that he applied for the reinstatement of a lapsed policy with Insular Life that was declined by said company although later approved for payment of very high premium as a result of applicants medical examination b. When he told Asian Crusaders medical examiner that he was previously operated for a tumor in the stomach associated with ulcer and the tumor that was removed was the size of a hens egg when according to the report of the operating physician, the operation was for peptic ulcer and what was removed was a portion of his stomach measuring 12cm and 19cm

ISSUE: Was there material concealment on the part of the applicant? (NONE.) HELD: a. Evidence shows that what Kwong Nam applied for with Insular life was not for a new policy but for reinstatement and amendment which was approved thus he did not misrepresent any fact. The question to be asked: Was Asian Crusader, because of insured's representation that he was operated for a tumor in his stomach, misled or deceived into entering the contract or in accepting the risk at the rate of premium agreed upon? NO. 1. Section 27 of the Insurance Law (Act 2427) states that: Such party a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty. 2. Concealment exists where the assured had knowledge of a fact material to the risk, and honesty, good faith, and fair dealing requires that he should communicate it to the assurer, but he designedly and intentionally withholds the same. i. Must be material, fraudulent and intentionally withheld (Thus assuming the statement was false, FRAUDULENT INTENT MUST BE DULY ESTABLISHED and burden falls on insurer to prove this) 3. Statement that tumor was associated with ulcer must be construed as made in good faith 4. Furthermore, the alleged misrepresentation would have sufficed to induce insurer to make further inquiries about the ailment and operation of insured, which they did not do. i. Section 32 of the Insurance Law states: The right to information of material facts may be waived either by the terms of insurance or by neglect to make inquiries as to such facts where they are distinctly implied in other facts of which information is communicated. ii. Where in the application a question does not appear to be answered or was imperfectly answered and insurer issues a policy without any further inquiry, they waive the imperfection of the answer and the omission to fully answer immaterial.

b.

Justa Aurea G. Bautista (A2015)