[No. 47593.

 December 29, 1943]

The Insular Life Assurance Co., Ltd., petitioner, vs. Serafin D. Feliciano et al., respondents. 

1.Life Insurance; Validity of Policy Containing False Statements Regarding Health of

the Insured.—The policies were issued on the basis of the statement subscribed by the applicant to
the effect that he was and had been in good health, when as a matter of fact he was then
suffering from advanced pulmonary tuberculosis. Held: Althogh the agent and the medical examiner
knew that statement to be false, no valid contract of insurance was entered into because there was no
real meeting of the minds of the parties.

2.Id.; Id.—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.

3.Id.; Id.; Connivance with Soliciting Agent and Medical Examiner.—From all the facts and circumstances
of the 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.

RESOLUTION on motion for reconsideration.

The facts are stated in the opinion of the court.

Manuel Roxas and Araneta, Zaragoza, Araneta & Bautista for petitioner.

Delfin Joven and Pablo Lorenzo for respondents.

Ramirez & 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 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.)

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 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 this 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.

***********

"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 application 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 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.

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 the first
premium has been paid and the policy has 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 noticed 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 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.

Wherefore, 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, J J., concur.

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 f uil 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 served 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 Sep-
tember 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
476

476 PHILIPPINE REPORTS ANNOTATED

Insular Life Assurance Co. vs. Feliciano et al.
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 given. 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 it was issued, to ascertain
whether the agent has
477

VOL. 74, DECEMBER 29, 1943 477

Insular Life Assurance Co. vs. Feliciano et al.
acted in good faith, since, under such circumstances, the insured may rely upon the presumption that he
has been honestly dealt with by 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. 2d, 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, 154 111., 452, 45 NE., 1078, 36 LRA.,
374; Phoenix Ins. Co. vs. Tucker, 92 111., 64, 34 Am Rep., 106; Commercial Ins. Co. vs. Spanknoble, 52
111., 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 accedited 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.: I concur in the forgoing dissenting opinion: 

Motion sustained; judgment reversed.

(Note: Justices Imperial and Hontiveros of the Court of Appeals took part in this case by special
designation.)

—————— Insular Life Assurance Co. vs. Feliciano et al., 74 Phil., 468, No. 47593 December 29, 1943