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, 1 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. 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.
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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 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 Xray 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 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, 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 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.

Footnotes
1 Reported in 40 Off. Gaz., (Oct. 4, 1941) 2842-2855.