G.R. No. L-30685 - Ng Gan Zee vs. Asian Crusader Life Assurance Corp.

On May 12, 1962, Kwong Nam applied for a 20-year endowment life insurance policy in the amount of ₱20,000, with his wife Ng Gan Zee as the beneficiary.
The appellant, Asian Crusader Life Assurance Corporation, received the premium and approved the application on the same date, issuing the policy.

Kwong Nam died on December 6, 1963, due to cancer of the liver with metastasis.
All premiums on the policy had been fully paid at the time of his death.
On January 10, 1964, Ng Gan Zee filed a claim for the payment of the face value of the policy, submitting the required proof of death.
The appellant denied the claim, alleging that the insured made untrue statements in his application material to the risk.

The appellant claimed that the insured misrepresented by answering “No” to whether any insurance company had ever refused his application or offered a different policy. The appellant contended that the insured’s reinstatement application with Insular Life Insurance Company had initially been declined (but later approved with higher premiums).
The appellant also contended the insured gave false information about his medical condition during his medical examination, claiming that the insured stated he had a tumor operation, whereas medical reports showed he was operated on for a peptic ulcer involving partial gastric resection.

The Insurance Commissioner conducted an investigation and found no material concealment by the insured, therefore advising the appellant to pay the face value of the policy.
Despite this, the appellant refused to settle the claim.

No evidence supported the allegation that Insular Life Insurance refused any application of the insured, as reinstatement was granted on April 24, 1962, for ₱20,000.
The insured’s answer of “No” was truthful given the reinstatement and amendment nature of Insular Life’s approval, not a new policy application.
While the insured’s description of the operation was medically inaccurate, there was no evidence that he intended to defraud or misrepresent material facts; the statement was made in good faith based on his understanding.
The insurer failed to inquire further into the medical condition despite indications for further investigation.

The Court of Appeals certified the case to the Supreme Court on a question of law.
The Supreme Court affirmed the trial court judgment ordering payment of the policy’s face value plus interest and costs.

Whether the insured misrepresented material facts in his insurance application that would justify avoidance of the policy.
Whether the insured concealed material facts intentionally and fraudulently so as to deprive the insurer of its remedies under the Insurance Law.
Whether the insurer effectively waived its right to demand further information or inquiry based on the application and medical examiner’s report.