Insular Life Assurance Co. v. Feliciano G.R. No.

L-47593 1 of 6

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-47593 December 29, 1943

THE INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
SERAFIN D. FELICIANO ET AL., respondents.
Manuel Roxas and Araneta, Zaragoza, Araneta and Bautista for petitioner.
Deflfin Joven and Pablo Lorenzo for respondents.
Ramirez and Ortigas as amici curiae.

OZAETA, J.:
In a four-to-three decision promulgated on September 13, 1941, this Court affirmed the judgment of the Court of
Appeals in favor of the respondents and against the petitioner for the sum of P25,000, representing the value of two
insurance policies issued by the petitioner on the life of Evaristo Feliciano. A motion to reconsider and set aside
said decision has been filed by the petitioner, and both parties have submitted exhaustive and luminous written
arguments in support of their respective contentions.
The facts of the case are set forth in the majority and dissenting opinions heretofore handed down by this Court, the
salient points of which may be briefly restated as follows:
Evaristo Feliciano, who died on September 29, 1935, was suffering with advanced pulmonary tuberculosis when he
signed his applications for insurance with the petitioner on October 12, 1934. On that same date Doctor Trepp, who
had taken X-ray pictures of his lungs, informed the respondent Dr. Serafin D. Feliciano, brother of Evaristo, that
the latter "was already in a very serious ad practically hopeless condition." Nevertheless the question contained in
the application "Have you ever suffered from any ailment or disease of the lungs, pleurisy, pneumonia or
asthma?" appears to have been answered , "No" And above the signature of the applicant, following the answers
to the various questions propounded to him, is the following printed statement:1awphil.net
I declare on behalf of myself and of any person who shall have or claim any interest in any policy issued
hereunder, that each of the above answers is full, complete and true, and that to the best of my knowledge
and belief I am a proper subject for life insurance. (Exhibit K.)
The false answer above referred to, as well as the others, was written by the Company's soliciting agent Romulo M.
David, in collusion with the medical examiner Dr. Gregorio Valdez, for the purpose of securing the Company's
approval of the application so that the policy to be issued thereon might be credited to said agent in connection
with the inter-provincial contest which the Company was then holding among its soliciting agents to boost the sales
of its policies. Agent David bribed Medical Examiner Valdez with money which the former borrowed from the
applicant's mother by way of advanced payment on the premium, according to the finding of the Court of Appeals.
Insular Life Assurance Co. v. Feliciano G.R. No. L-47593 2 of 6

Said court also found that before the insured signed the application he, as well as the members of his family, told
the agent and the medical examiner that he had been sick and coughing for some time and that he had gone three
times to the Santol Sanatorium and had X-ray pictures of his lungs taken; but that in spite of such information the
agent and the medical examiner told them that the applicant was a fit subject for insurance.
Each of the policies sued upon contains the following stipulations:
This policy and the application herefor constitute the entire contract between the parties hereto. . . . Only the
President, or the Manager, acting jointly with the Secretary or Assistant Secretary (and then only in writing
signed by them) have power in behalf of the Company to issue permits, or to modify this or any contract, or
to extend the same time for making any premium payment, and the Company shall not be bound by any
promise or representation heretofore or hereafter given by any person other than the above-named officials,
and by them only in writing and signed conjointly as stated.
The application contains, among others, the following statements:
18. I [the applicant] hereby declare that all the above statements and answers as well as all those that I
may make to the Company's Medical Examiner in continuation of this application, to be complete, true and
correct to the best of my knowledge and belief, and I hereby agree as follows:
1. That his declaration, with the answers to be given by me to the Medical Examiner, shall be the basis of
the policy and form part of same.
xxx xxx xxx
3. That the said policy shall not take effect until the first premium has been paid and the policy has been
delivered to and accepted by me, while I am in good health.
4. That the agent taking this application has no authority to make, modify or discharge contracts, or to
waive any of the Company's rights or requirements.
5. My acceptance of any policy issued on this application will constitute a ratification by me of any
corrections in or additions to this application made by the Company in the space provided "For Home
Office Corrections or Additions Only." I agree that photographic copy of this applications as corrected or
added to shall constitute sufficient notice to me of the changes made. (Emphasis added.)
The petitioner insists that upon the facts of the case the policies in question are null and void ab initio and that all
that the respondents are entitled to is the refund of the premiums paid thereon. After a careful re-examination of the
facts and the law, we are persuaded that petitioner's contention is correct. To the reasons adduced in the dissenting
opinion heretofore published, we only desire to add the following considerations:
When Evaristo Feliciano, the applicant for insurance, signed the application in blank and authorized the soliciting
agent and/or medical examiner of the Company to write the answers for him, he made them his own agents for that
purpose, and he was responsible for their acts in that connection. If they falsified the answers for him, he could not
evade the responsibility for he falsification. He was not supposed to sign the application in blank. He knew that the
answers to the questions therein contained would be "the basis of the policy," and for that every reason he was
required with his signature to vouch for truth thereof.
Moreover, from the facts of the case we cannot escape the conclusion that the insured acted in connivance with the
Insular Life Assurance Co. v. Feliciano G.R. No. L-47593 3 of 6

soliciting agent and the medical examiner of the Company in accepting the policies in question. Above the
signature of the applicant is the printed statement or representation: " . . . I am a proper subject for life insurance."
In another sheet of the same application and above another signature of the applicant was also printed this
statement: "That the said policy shall not take effect until he first premium has been paid and the policy as been
delivered to and accepted by me, while I am in good health." When the applicant signed the application he was
"having difficulty in breathing, . . . with a very high fever." He had gone three times to the Santol Sanatorium and
had X-ray pictures taken of his lungs. He therefore knew that he was not "a proper subject for life insurance."
When he accepted the policy, he knew that he was not in good health. Nevertheless, he not only accepted the first
policy of P20,000 but then and there applied for and later accepted another policy of P5,000.
We cannot bring ourselves to believe that the insured did not take the trouble to read the answers contained in the
photostatic copy of the application attached to and made a part of the policy before he accepted it and paid the
premium thereon. He must have notice that the answers to the questions therein asked concerning his clinical
history were false, and yet he accepted the first policy and applied for another. In any event, he obligated himself to
read the policy when he subscribed to this statement: "My acceptance of any policy issued on this application will
constitute a ratification by me of any corrections in or additions to this application made by the Company . . ." By
accepting the policy he became charged with knowledge of its contents, whether he actually read it or not. He
could not ostrich-like hide his head from it in order to avoid his part of the bargain and at the same time claim the
benefit thereof. He knew, or was chargeable with knowledge, from the very terms of the two policies sued upon
(one of which is printed in English and the other in Spanish) that the soliciting agent and the medical examiner had
no power to bind the Company by any verbal promise or oral representation. The insured, therefore, had no right to
rely and we cannot believe he relied in good faith upon the oral representation. The insured, therefore, had no
right to rely and we cannot believe he relied in good faith upon the oral representation of said agent and
medical examiner that he (the applicant) was a fit subject for insurance notwithstanding that he had been and was
still suffering with advanced pulmonary tuberculosis.
From all the facts and circumstances of this case, we are constrained to conclude that the insured was a
coparticipant, and coresponsible with Agent David and Medical Examiner Valdez, in the fraudulent procurement of
the policies in question and that by reason thereof said policies are void ab initio.
Wheretofore, the motion for reconsideration is sustained and the judgment of the Court of Appeals is hereby
reversed. Let another judgment be entered in favor of the respondents and against the petitioner for the refund of
the premiums amounting to P1,389, with legal interest thereon from the date of the complaint, and without any
finding as to costs.
Moran, Paras and Bocobo, JJ., concur.

Separate Opinions
YULO, C.J., concurring:
I can find no quarrel with the legal considerations and conclusions set forth in the original decision promulgated by
this Court. As general rules of law they find full support not only in reason and in logic, but also in simple human
sense of justice. More so, modern and complicated practices attendant to the ever growing trade in life insurance
demand the strictest accountability by insurance companies for acts of their authorized agents. In this way only
Insular Life Assurance Co. v. Feliciano G.R. No. L-47593 4 of 6

may the State afford reasonable protection to the unwary public from abuse by such organizations as may be found
to be of questionable moral standards.
But a careful consideration of the evidentiary facts as set forth in the decision of the Court of Appeals leads me to
conclude that the ends of justice would not be serve by the application to the present case of the rules so
enunciated. Rather, to serve the ends of justice the case of the respondents should be removed from the protection
of such rules.
The subject of the insurance policies under consideration is the life of the assured. It is contended by his
beneficiaries that they took these policies on the basis of a life expectancy of a person gravely stricken with
tuberculosis. They have consistently made protestations that they had so informed the agents of the insurance
company. But the policies were issued upon the life of the assured, as a perfectly normal and healthy person. The
error is vital and goes to the very existence of the contract itself. Who is responsible for the error?
The direct cause, of course, is the false recitals in the application for insurance. While it is true that it was the
agents of the insurance company who filled out such application, yet it was the assured who, by signing the
application in blank, made it possible for the said agents to procure the issuance of the policies on the basis of false
information, in order to suit their own purposes. Upon the admitted facts, I am of the opinion that in justice and in
equity, the responsibility for the falsifications made by the insurance agents in the preparation of the insurance
application should be laid at the door of the assured and his beneficiaries.
I vote with the majority in granting the motion for reconsideration and in reversing the decision under review.
HONTIVEROS, J., dissenting:
The reasons given in the dissenting opinion in this case, as published in the Official Gazette of October 4, 1941
(pp. 2847 to 2855), supplemented by those in the resolution of the majority on the motion for reconsideration, do
not seem to me sufficient to overthrow the decision rendered by the Court of First Instance, confirmed by the Court
of Appeals, and sustained by this Supreme court in its decision of September 18, 1941. The alleged connivance
between the insured Evaristo Feliciano, the agent Romulo M. David, and the medical examiner Dr. Gregorio
Valdez not only does not clearly appear of record, but on the contrary is denied in the finding of facts of the court a
quo and of the Court of Appeals which cannot be reviewed or altered by this Court.
The mere fact that the insured signed at the bottom of the application for insurance when some of its lines intended
for answers to certain questions were still in blank, answers which according to the evidence and to the findings of
the two inferior courts he had grounds to believe will be made in accordance with the information which he and his
family had given to agent David and to Dr. Valdez, does not convert these two persons into agents of the insured in
a way as to make the latter responsible for the acts of the former. That the photostatic copies of said forms which
are attached to the policies object of this case are almost illegible, is a fact which should be taken into account,
together with the other fact that Evaristo Feliciano does not know English, the language in which those documents
are written. In support of this dissenting opinion, the following authorities may be cited:
The mere failure of the insured to inform himself of the insertion of false answers in the application which
has been filled out by the agent of the insurer does not convict him of lack of good faith. (Vol. 5, Cooley's
Briefs on Insurance, 2nd Ed., p. 4136, and many cases cited.)
The insured is not chargeable with such negligence as will render him liable for false answers inserted by
the agent merely because he signed the application in blank and trusted the agent to fill out by the agent,
Insular Life Assurance Co. v. Feliciano G.R. No. L-47593 5 of 6

without reading it. (Id., p. 4136, and many cases cited.)

An illiterate person or one who does not understand the English language (as is the case with Evaristo
Feliciano) is not guilty of inexcusable negligence in failing to read the application or having it read to him,
nor can it be said that such person deliberately made a false statement because he did not read over the
application. (81 ALR 865, 866, W. 117 ALR 796.)
Nor can it be said that the assured, who has fully, frankly, truthfully, and in good faith answered all the
required questions, is guilty of negligence in signing, without reading, the application which is thereupon
prepared by the agent. He is justified in assuming that the agent, has, with equal good faith, truthfully
recorded the answers give. He may well say to the Company: 'You accredited this man to me as your
representative, and I signed the application thus prepared by him, relying upon the character which you
gave him, when you commissioned him to come to me as your agent. If he acted dishonestly in the matter,
you, and not I, must suffer the consequences . . .! (Germania Life Ins. Co. vs. Lunkeheimer [1931] Ind.,
538; 26 N. E., 1052)
In such case the acceptance of the policy, with this application attached, does not require the insured to
institute an investigation into its provisions, or the conditions upon which is was issued, to ascertain
whether the agent has acted in good faith, since, under such circumstances, the insured may rely upon the
presumption that he has been honestly dealt with the insurer. (Otto vs. Hartford Ins. Co., 38 Minn., 423).
Besides, the principles that the insured is not bound to know the contents of the application, and may rely
on the agent's assurances that his answers have been correctly written will, of course, apply with special
force where the insured is illiterate and unable to read, or is ignorant of the language. (Vol. 5, Cooley's
Briefs on Insurance, 2nd Ed. p. 4138, cases cited.)
And also where the photostatic copies of the application embodied in the policy are practically illegible, the
insured is not bound to know the contents of the application. (New York Ins. Co. vs. Holpem D.C. 57 Fed.
2nd, 200).
According to the great weight of authority, if an agent of the insurer, after obtaining from an applicant for
insurance a correct and truthful answer to interrogations contained in the application for insurance, without
knowledge of the applicant fills in false answers, either fraudulently or otherwise, the insurer cannot assert
the falsity of such answers as a defense to the liability on the policy and this is generally without regard to
the subject matter of the answers or the nature of the agent's duties or limitations on his authority, at least if
not brought to the attention of the applicant. It is equally well settled that if a correct representation is made
in a written application, or the insurance agent issuing the policy is appraised of the true facts concerning
the matter in question, as for instance the title to the insured premises, but the agent inserts an incorrect
statement in the policy, the insurer cannot rely upon the error in avoidance of its liability". Home Ins. Co.
vs. Mendenhall, 154 Ill., 452, 45 NE., 1078, 36 LRA., 374; Phoenix Ins. Co. vs. Tucker, 92 Ill., 64, 34 Am
Rep., 106; Commercial Ins. Co. vs. Spanknoble, 52 Ill., 53, 4 Am. Report, 582; Young vs. Hartford F. Ins.
Co. 45 Iowa, 377, 24 Am. Rep., 754; Welsh vs. London Assur. 151 Pa., 607, 25 A, 142, 21 Am St. Rep., 726
(Taken from Am Juris. on Insurance Vol. 29, par. 843).
An insured may be justified in signing an application in blank at the request of the insurer's agent, who
agrees to fill it in from data furnished by the insured or from an old application. In fact, an insurer cannot
Insular Life Assurance Co. v. Feliciano G.R. No. L-47593 6 of 6

urge the falsity of representations contained in the policy issued, or in the application, where such
representations were inserted therein, either by the company or its agent, after the application was signed,
without the knowledge or consent of the insured, who has made no such representations. (Couch on
Insurance, Vol. 4, par. 842 b.)
I believe that the motion for reconsideration presented in this case should be denied, not only because of the
weighty reasons relied upon in the decision which it attacks, but also because a dangerous precedent would
otherwise be established, for, with the destruction of the confidence which the public has hitherto reposed in the
duly accredited agents of insurance companies and in their examining physicians, this branch of the economic life
of the people will have to be unfavorably affected.
Imperial, J., dissents.