FIRST DIVISION

[G.R. No. 47593. December 29, 1943.]

THE INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs.

SERAFIN D. FELICIANO ET AL., respondents.

Manuel Roxas and Araneta, Zaragoza, Araneta & Bautista for

petitioner.
Delfin Joven and Pablo Lorenzo for respondents.
Ramirez & Ortigas as amici curiae.

SYLLABUS

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: Altho 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.

DECISION

OZAETA, J : p

In a four-to-three decision promulgated on September 13, 1941, 1 this

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 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.)
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 time for making any premium payment, and the Company
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 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.
"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 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
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 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, JJ., concur.

Separate Opinions
YULO, C.J., concurring:

I can find no quarrel with the legal considerations and conclusions set
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 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 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 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
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 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 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 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
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 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 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.:
I concur in the forgoing dissenting opinion:
Footnotes

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

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