The Insular Life Assurance Company, Ltd. v.

Feliciano

Facts: 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:

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 answers 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.

Issue: W/N 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.

Ruling: 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.

From the facts of the case it must be noted 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 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.

The Court does not also 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.
Saturnino v. The Philippine American Life Insurance Company

Facts:  The policy sued upon is one for 20-year endowment non-medical insurance. This
kind of policy dispenses with the medical examination of the applicant usually required in
ordinary life policies. However, detailed information is called for in the application
concerning the applicant’s health and medical history. The written application in this case
was submitted by Saturnino to appellee on November 16, 1957, witnessed by appellee’s
agent Edward A. Santos. The policy was issued on the same day, upon payment of the first
year’s premium of P339.25. On September 19, 1958 Saturnino died of pneumonia, secondary
to influenza. Appellants here, who are her surviving husband and minor child, respectively,
demanded payment of the face value of the policy.

The claim was rejected and this suit was subsequently instituted. It appears that two months
prior to the issuance of the policy or on September 9, 1957, Saturnino was operated on for
cancer, involving complete removal of the right breast, including the pectoral muscles and
the glands found in the right armpit. She stayed in the hospital for a period of eight days,
after which she was discharged, although according to the surgeon who operated on her
she could not be considered definitely cured, her ailment being of the malignant type.
Notwithstanding the fact of her operation Estefania A. Saturnino did not make a disclosure
thereof in her application for insurance.

On the contrary, she stated therein that she did not have, nor had she ever had, among
other ailments listed in the application, cancer or other tumors; that she had not consulted
any physician, undergone any operation or suffered any injury within the preceding five
years; and that she had never been treated for nor did she ever have any illness or disease
peculiar to her sex, particularly of the breast, ovaries, uterus, and menstrual disorders. The
application also recites that the foregoing declarations constituted “a further basis for the
issuance of the policy.”

Issue: whether or not the insured made such false representations of material facts as to
avoid the policy.

Ruling: There can be no dispute that the information given by her in her application for
insurance was false, namely, that she had never had cancer or tumors, or consulted any
physician or undergone any operation within the preceding period of five years. Are the
facts then falsely represented material? The Insurance Law (Section 30) provides that
"materiality is to be determined not by the event, but solely by the probable and reasonable
influence of the facts upon the party to whom the communication is due, in forming his
estimate of the proposed contract, or in making his inquiries." It seems to be the contention
of appellants that the facts subject of the representation were not material in view of the
"non-medical" nature of the insurance applied for, which does away with the usual
requirement of medical examination before the policy is issued. The contention is without
merit. If anything, the waiver of medical examination renders even more material the
information required of the applicant concerning previous condition of health and diseases
suffered, for such information necessarily constitutes an important factor which the insurer
takes into consideration in deciding whether to issue the policy or not. It is logical to
assume that if appellee had been properly apprised of the insured's medical history she
would at least have been made to undergo medical examination in order to determine her
insurability.

Appellants argue that due information concerning the insured's previous illness and
operation had been given to appellees agent Edward A. Santos, who filled the application
form after it was signed in blank by Estefania A. Saturnino. This was denied by Santos in his
testimony, and the trial court found such testimony to be true. This is a finding of fact which
is binding upon us, this appeal having been taken upon questions of law alone. We do not
deem it necessary, therefore, to consider appellee's additional argument, which was upheld
by the trial court, that in signing the application form in blank and leaving it to Edward A.
Santos to fill (assuming that to be the truth) the insured in effect made Santos her agent for
that purpose and consequently was responsible for the errors in the entries made by him in
that capacity.

In the application for insurance signed by the insured in this case, she agreed to submit to a
medical examination by a duly appointed examiner of appellee if in the latter's opinion such
examination was necessary as further evidence of insurability. In not asking her to submit to
a medical examination, appellants maintain, appellee was guilty of negligence, which
precluded it from finding about her actual state of health. No such negligence can be
imputed to appellee. It was precisely because the insured had given herself a clean bill of
health that appellee no longer considered an actual medical checkup necessary.

Appellants also contend there was no fraudulent concealment of the truth inasmuch as the
insured herself did not know, since her doctor never told her, that the disease for which she
had been operated on was cancer. In the first place the concealment of the fact of the
operation itself was fraudulent, as there could not have been any mistake about it, no
matter what the ailment. Secondly, in order to avoid a policy it is not necessary to show
actual fraud on the part of the insured. 

In this jurisdiction a concealment, whether intentional or unintentional, entitles the insurer to

rescind the contract of insurance, concealment being defined as "negligence to
communicate that which a party knows and ought to communicate" (Sections 24 & 26, Act
No. 2427).

The judgment appealed from, dismissing the complaint and awarding the return to
appellants of the premium already paid, with interest at 6% up to January 29, 1959,
affirmed, with costs against appellants.
Edillon v. Manila Bankers Life Insurance Corporation

Facts: In 1969, Carmen O. Lapuz applied with Manila Bankers Life Insurance Corp.
(Respondent) for an insurance coverage against accident and injuries. In the application, it
was stated that her date of birth is July 11, 1904. She paid the premium of P20.00.
Respondent issued a Certificate of Insurance in favor of Carmen after filing the application
and receiving her payment. The policy was to be effective for 90 days.

The next month (May) of 1969, Carmen died in a car accident.

Regina L. Edillon (Petitioner), sister and beneficiary of Carmen, filed her claim for the
proceeds of the insurance. Her claim was denied by the Respondents, relying on a provision
in the Certificate of Insurance which excluded its liability to pay claims in behalf of “persons
who are under the age of 16 or over the age of 60 years”. Respondents said that Carmen is
over 60 when she applied for the insurance coverage, therefore the policy was null and void.

ISSUE: WON Manila Bankers is liable (YES).

HELD: The age of the insured Carmen O. Lapuz was not concealed to the insurance
company. Her application for insurance coverage which was on a printed form furnished by
private respondent and which contained very few items of information clearly indicated her
age of the time of filing the same to be almost 65 years of age. Despite such information
which could hardly be overlooked in the application form, considering its prominence
thereon and its materiality to the coverage applied for, the respondent insurance
corporation received her payment of premium and issued the corresponding certificate of
insurance without question. The accident which resulted in the death of the insured, a risk
covered by the policy, occurred on May 31, 1969 or FORTY-FIVE (45) DAYS after the
insurance coverage was applied for. There was sufficient time for the private respondent to
process the application and to notice that the applicant was over 60 years of age and
thereby cancel the policy on that ground if it was minded to do so. If the private
respondent failed to act, it is either because it was willing to waive such disqualification; or,
through the negligence or incompetence of its employees for which it has only itself to
blame, it simply overlooked such fact.

Under the circumstances, the insurance corporation is already deemed in estoppel. It

inaction to revoke the policy despite a departure from the exclusionary condition contained
in the said policy constituted a waiver of such condition, as was held in the case of "Que
Chee Gan vs. Law Union Insurance Co., Ltd.,", this Court stated the following:

We are in agreement with the trial Court that the appellant is barred by waiver (or rather
estoppel) to claim violation of the so-called fire hydrants warranty, for the reason that
knowing fully an that the number of hydrants demanded therein never existed from the very
beginning, the appellant nevertheless issued the policies in question subject to such
warranty, and received the corresponding premiums. It would be perilously close to
conniving at fraud upon the insured to allow appellant to claim now as void ab initio the
policies that it had issued to the plaintiff without warning of their fatal defect, of which it
was informed, and after it had misled the defendant into believing that the policies were
effective.

The insurance company was aware, even before the policies were issued, that in the
premises insured there were only two fire hydrants installed by Que Chee Gan and two
others nearby, owned by the municipality of Tabaco, contrary to the requirements of the
warranty in question.

WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE. In lieu
thereof, the private respondent insurance corporation is hereby ordered to pay to the
petitioner the sum of TEN THOUSAND (P10,000.00) PESOS as proceeds of Insurance
Certificate No. 128866 with interest at the legal rate from May 31, 1969 until fully paid, the
further sum of TWO THOUSAND (P2,000.00) PESOS as and for attorney's fees, and the costs
of suit.
Manila Bankers Life Insurance Corp. v. Cresencia P. Aban

Facts: On July 3, 1993, Delia Sotero took out a life insurance policy from Manila Bankers Life
Insurance, designating respondent Cresencia P. Aban, her niece, as her beneficiary.
Petitioner issued the Insurance Policy, with a face value of P100,000.00, in Sotero’s favor on
August 30, 1993, after the requisite medical examination and payment of the insurance
premium.

On April 10, 1996,when the insurance policy had been in force for more than two years and
seven months, Sotero died. Respondent filed a claim for the insurance proceeds on July 9,
1996. Petitioner, however, denied the claim and instead refunded the premiums paid on the
policy claiming that the policy was obtained by fraud, concealment and/or
misrepresentation. Petitioner also filed for rescission.

Respondent filed a Motion to Dismiss claiming that petitioner’s cause of action was barred
by prescription pursuant to Section 48 of the Insurance Code, which provides as follows:
“Whenever a right to rescind a contract of insurance is given to the insurer by any provision
of this chapter, such right must be exercised previous to the commencement of an action
on the contract.
After a policy of life insurance made payable on the death of the insured shall have been in
force during the lifetime of the insured for a period of two years from the date of its issue
or of its last reinstatement, the insurer cannot prove that the policy is void  ab initio or is
rescindable by reason of the fraudulent concealment or misrepresentation of the insured or
his agent.”

Issue: Whether or not Manila Bankers Life Insurance Corporation can still rescind the
insurance contract.

Ruling: No, Manila Bankers Life Insurance Corporation can no longer rescind the insurance
contract.

Allegations of fraud, which are predicated on respondent’s alleged posing as Sotero and
forgery of her signature in the insurance application, are at once belied by the trial and
appellate courts’ finding that Sotero herself took out the insurance for herself. “Fraudulent
intent on the part of the insured must be established to entitle the insurer to rescind the
contract”. In the absence of proof of such fraudulent intent, no right to rescind arises.

Moreover, Section 48 of the Insurance Code provides that an insurer is given two years –
from the effectivity of a life insurance contract and while the insured is alive – to discover or
prove that the policy is void ab initio or is rescindable by reason of the fraudulent
concealment or misrepresentation of the insured or his agent. After the two-year period
lapses, or when the insured dies within the period, the insurer must make good on the
policy, even though the policy was obtained by fraud, concealment, or misrepresentation.
Section 48 regulates both the actions of the insurers and prospective takers of life insurance.
It gives insurers enough time to inquire whether the policy was obtained by fraud,
concealment, or misrepresentation; on the other hand, it forewarns scheming individuals
that their attempts at insurance fraud would be timely uncovered – thus deterring them
from venturing into such nefarious enterprise. At the same time, legitimate policy holders
are absolutely protected from unwarranted denial of their claims or delay in the collection
of insurance proceeds occasioned by allegations of fraud, concealment, or misrepresentation
by insurers, claims which may no longer be set up after the two-year period expires as
ordained under the law.

In this case, the records show that the insured died after the two-year period, hence, the
petitioner is already barred from proving that the policy is void ab initio by reason of
fraudulent concealment or misrepresentation.

WHEREFORE, the Petition is DENIED. The assailed September 28, 2005 Decision and the
November 9, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62286 are
AFFIRMED.
Perez v. Court of Appeals

Facts: Primitivo B. Perez had been insured with the BF Lifeman Insurance Corporation for
P20,000.00. An agent of the insurance corporation, visited Perez in Quezon and convinced
him to apply for additional insurance coverage of P50,000.00. Virginia A. Perez, Primitivo’s
wife, paid P2,075.00 to the agent. The receipt issued indicated the amount received was a
"deposit." Unfortunately, the agent lost the application form accomplished by Perez and he
asked the latter to fill up another application form. The agent sent the application for
additional insurance of Perez to the Quezon office. Such was supposed to be forwarded to
the Manila office.

On November 25, 1987, Perez died in an accident. He was riding in a banca which capsized
during a storm.

His application papers for the additional insurance of P50,000.00 were still with the Quezon
office. It was only after some time that the papers were brought to Manila. Without knowing
that Perez died, BF Lifeman Insurance Corporation approved the application and issued the
corresponding policy for the P50,000.00.

Petitioner Virginia Perez went to Manila to claim the benefits under the insurance policies of
the deceased. She was paid P40,000.00 under the first insurance policy but the insurance
company refused to pay the claim under the additional policy coverage of P50,000.00

The insurance company maintained that the insurance for P50,000.00 had not been
perfected at the time of the death of Primitivo Perez. Consequently, the insurance company
refunded the amount paid. BF Lifeman Insurance Corporation filed a complaint against
Virginia Perez seeking the rescission and declaration of nullity of the insurance contract in
question.

Petitioner Virginia A. Perez, on the other hand, averred that the deceased had fulfilled all his
prestations under the contract and all the elements of a valid contract are present.

RTC: Ruled in favor of petitioner ordering respondent to pay 150,000 pesos.

CA: However, reversed the decision of the trial court saying that the insurance contract for
P50,000.00 could not have been perfected since at the time that the policy was issued,
Primitivo was already dead. That the contract of insurance had to be assented to by both
parties and so long as the application for insurance has not been either accepted or
rejected, it is merely an offer or proposal to make a contract.

Issue: W/N there was a perfected contract of insurance.

Ruling: NO. Insurance is a contract whereby, for a stipulated consideration, one party
undertakes to compensate the other for loss on a specified subject by specified perils.7A
contract, on the other hand, is a meeting of the minds between two persons whereby one
binds himself, with respect to the other to give something or to render some service.8Under
Article 1318 of the Civil Code, there is no contract unless the following requisites concur:
(1) Consent of the contracting parties; (2) Object certain which is the subject matter of the
contract; (3) Cause of the obligation which is established

Consent must be manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. The offer must be certain and the
acceptance absolute.

When Primitivo filed an application for insurance, paid P2,075.00 and submitted the results
of his medical examination, his application was subject to the acceptance of private
respondent BF Lifeman Insurance Corporation. The perfection of the contract of insurance
between the deceased and respondent corporation was further conditioned upon
compliance with the following requisites stated in the application form:

There shall be no contract of insurance unless and until a policy is issued on this
application and that the said policy shall not take effect until the premium has been
paid and the policy delivered to and accepted by me/us in person while I/We,
am/are in good health.

The assent of private respondent BF Lifeman Insurance Corporation therefore was not given
when it merely received the application form and all the requisite supporting papers of the
applicant. Its assent was given when it issues a corresponding policy to the applicant. Under
the abovementioned provision, it is only when the applicant pays the premium and receives
and accepts the policy while he is in good health that the contract of insurance is deemed
to have been perfected.

It is not disputed, however, that when Primitivo died on November 25, 1987, his application
papers for additional insurance coverage were still with the branch office of respondent
corporation in Gumaca and it was only two days later, or on November 27, 1987, when
Lalog personally delivered the application papers to the head office in Manila. Consequently,
there was absolutely no way the acceptance of the application could have been
communicated to the applicant for the latter to accept inasmuch as the applicant at the
time was already dead.

In the case at bar, the following conditions were imposed by the respondent company for
the perfection of the contract of insurance:
(a) a policy must have been issued;
(b) the premiums paid; and
(c) the policy must have been delivered to and accepted by the applicant while he is in
good health.
As stated above, a contract of insurance, like other contracts, must be assented to by both
parties either in person or by their agents. So long as an application for insurance has not
been either accepted or rejected, it is merely an offer or proposal to make a contract. The
contract, to be binding from the date of application, must have been a completed contract,
one that leaves nothing to be done, nothing to be completed, nothing to be passed upon,
or determined, before it shall take effect. There can be no contract of insurance unless the
minds of the parties have met in agreement.