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

47593, [September
13, 1941], 73 PHIL 201-218
FACTS: One Evaristo Feliciano filed an application for insurance with the herein
petitioner upon the solicitation of one of its agents. Two insurance policies to the
aggregate amount of P25,000 were issued to him. Feliciano died on September 29,
1935. The defendant company refused to pay on the ground that the policies were
fraudulently obtained, the insured having given false answers and statements in the
application as well as in the medical report. (a detailed fact is given in the next
case)
ISSUE: W/N the Insular has a right to avoid the policy?
HELD: NO. The agent knew all the time the true state of health of the insured. The
insurer's medical examiner approved the application knowing full well that the
applicant was sick. The situation is one in which one of two innocent parties must
bear a loss for his reliance upon a third person. In this case, it was the insurer who
gave the agent authority to deal with the applicant. It was the one who selected the
agent, thus implying that the insured could put his trust on him. It was the one who
drafted and accepted the policy and consummated the contract. It seems
reasonable that as between the two of them, the one who employed and
gave character to the third person as its agent should be the one to bear
the loss.
The weight of authority is that if an agent of the insurer, after obtaining from an
applicant for insurance a correct and truthful answer to interrogatories 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 liability on the policy, and this is true 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.
The fact that the insured did not read the application which he signed, is
not indicative of bad faith. It has been held that it is not negligence for the
insured to sign an application without first reading it if the insurer by its conduct in
appointing the agent influenced the insured to place trust and confidence in the
agent.
(NOTE: This seemed to be reversed by the SC in its decision in the next
case.)

Insular Life Assurance Co., Ltd. v. Feliciano, G.R. No. 47593, [December 29,
1943]
FACTS: Evaristo Feliciano, who died on September 29, 1935, was suffering with
advanced pulmonary tuberculosis when he signed his application 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 and 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:
"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,
Insular insists that upon the facts of the case the policies in question are null and
void ab initio, invoking concealment, and that all that the respondents are entitled
to is the refund of the premiums paid thereon.
ISSUE: W/N the heirs claim for the proceeds be granted?
HELD: NO. There was concealment. When Evaristo Feliciano, the applicant for
insurance, signed the application in blank and authorized the soliciting agent and/or
the 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 the 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 very reason he was required with his signature to
vouch for the 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. 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.