Ng Gan Zee v. Asian Crusader Life - Imperfection in the Application Form

122 SCRA 61

Facts:

>  In 1962, Kwon Nam applied for a 20yr endowment insurance on his life with his wife, Ng Gan Zee as the beneficiary.

>  He stated in his application that he was operated on for tumor of the stomach associated with ulcer.

>  In 1963, Kwong died of cancer of the liver with metastasis.  Asian refused to pay on the ground of alse information.

>  It was found that prior to his application, Kwong was diagnosed to have peptic ulcers, and that during the operation what was removed from Kwong’s body was actually a portion of the stomach and not tumor.

Issue:

Whether or not the contract may be rescinded on the ground of the imperfection in the application form.

Held:

NO.

Kwong did not have sufficient knowledge as to distinguish between a tumor and a peptic ulcer.  His statement therefore was made in good faith.  Asian should have made an inquiry as to the illness and operation of Kwong when it appeared on the face of the application that a question appeared to be imperfectly answered.  Asian’s failure to inquire constituted a waiver of the imperfection in the answer.