Argente v West Coast G.R. No.

L-24899 March 19, 1928

J. Malcolm Held: Yes. Petition dismissed.

Facts: Ratio:
Bernardo Argente signed an application for joint insurance with his Vicenta de Ocampo, in response to the question asked by the medical
wife in the sum of P2,000. The wife, Vicenta de Ocampo, signed for examiner, answered no to "Have you ever consulted a physician for or have
the same. All the information contained in the applications was you ever suffered from any ailment or disease of the brain or nervous
furnished the agent by Bernardo Argente. system?" She also answered “none” as to the question whether she
consumed alcohol of not.
Argente was examined by Dr. Sta. Ana, a medical examiner for the To the question, "What physician or physicians, if any, not named above, have
West Coast. The result was recorded in the Medical Examiner's you consulted or been treated by, within the last five years and for what illness
Report, and with the exception of the signature of Bernardo Argente, or ailment?" she answered "None."
was in the hand-writing of Doctor Sta. Ana. But the information
or answers to the questions contained on the face of the Medical But the facts show that she was taken to San Lazaro Hospital, her case was
Examiner's Report were furnished the doctor by Argente. diagnosed by the admitting physician as "alcoholism”, moreover, she was
diagnosed with "phycho-neurosis."
Vicenta de Ocampo, wife of the plaintiff, was examined at her Section 25 of the Insurance Code defined concealment as "a neglect to
communicate that which a party knows and ought to communicate."
residence by the same doctor. The court held that the alleged concealment was not immaterial and
The spouses submitted to West Coast Life an amended application, insufficient to avoid the policy. In an action on a life insurance policy where
increasing the amount to P15,000, and asked that the policy be dated the evidence conclusively shows that the answers to questions concerning
May 15, 1925. The amended application was accompanied by the diseases were untrue, the truth of falsity of the answers become the
documents entitled "Short Form Medical Report." In both of these determining factor. If the true facts been disclosed by the assured, the
documents appear certain questions and answers. insurance would never have been granted.
A temporary policy for P15,000 was issued to Bernardo Argente and
his wife as of May 15, but it was not delivered until the first quarterly Concealment must, in the absence of inquiries, be not only material, but
premium on the policy was paid. More than thirty days had elapsed fraudulent, or the fact must have been intentionally withheld. If no inquiries are
made and no fraud or design to conceal enters into the concealment the
since the applicants were examined. Each of them was required contract is not avoided.
to file a certificate of health before the policy was delivered.
The assurer is entitled to know every material fact of which the assured has
Vicenta de Ocampo died of cerebral apoplexy. Argente presented a exclusive or peculiar knowledge, as well as all material facts which directly
claim in due form to the West Coast Life Insurance Co. for the payment tend to increase the hazard or risk which are known by the assured, or which
of the sum of P15,000. It was apparently disclosed that ought to be or are presumed to be known by him. And a concealment of such
the answers given by the insured in their medical examinations with facts vitiates the policy.
regard to their health were untrue. West Coastrefused to pay the claim
and wrote Argente to the effect that the claim was rejected due to If the assured has exclusive knowledge of material facts, he should fully and
fairly disclose the same, whether he believes them material or not. The
fraud. determination of the point whether there has or has not been a material
The trial court held the policy null and void, hence this appeal. concealment must rest largely in all cases upon the exact terms of the
contract.
Issue: WON Argente and Ocampo were guilty of concealment and
thereby misled the insurer into accepting the risk?
Great Pacific v CA G.R. No. L-31845 April 30, 1979 2. Whether Ngo Hing concealed the state of health and physical
J. De Castro condition of Helen Go, which rendered void the policy

Facts: Held: No. Yes. Petition dismissed.

Ngo Hing filed an application with the Great Pacific for a twenty-year
endowment policy in the amount of P50,000.00 on the life of his one- Ratio:
year old daughter Helen. He supplied the essential data which The receipt was intended to be merely a provisional insurance
petitioner Mondragon, the Branch Manager, wrote on the form. The contract. Its perfection was subject to compliance of the following
latter paid the annual premium the sum of P1,077.75 going over to the conditions: (1) that the company shall be satisfied that
Company, but he retained the amount of P1,317.00 as his commission the applicant was insurable on standard rates; (2) that if the company
for being a duly authorized agent of Pacific Life. does not accept the application and offers to issue a policy for a
different plan, the insurance contract shall not be binding until
Upon the payment of the insurance premium, the binding deposit the applicant accepts the policy offered; otherwise, the deposit shall
receipt was issued Ngo Hing. Likewise, petitioner Mondragon be refunded; and (3) that if the company disapproves the application,
handwrote at the bottom of the back page of the application form his the insurance applied for shall not be in force at any time, and the
strong recommendation for the approval of the insurance application. premium paid shall be returned to the applicant.
Then Mondragon received a letter from Pacific Life disapproving the
insurance application. The letter stated that the said life The receipt is merely an acknowledgment that the latter's branch
insurance application for 20-year endowment plan is not available for office had received from the applicant the insurance premium and had
minors below seven years old, but Pacific Life can consider the same accepted the application subject for processing by the insurance
under the Juvenile Triple Action Plan, and advised that if the offer is company. There was still approval or rejection the same on the basis
acceptable, the Juvenile Non-Medical Declaration be sent to the of whether or not the applicant is "insurable on standard rates." Since
company. Pacific Life disapproved the insurance application of respondent Ngo
Hing, the binding deposit receipt in question had never become in
The non-acceptance of the insurance plan by Pacific Life was force at any time. The binding deposit receipt is conditional and does
allegedly not communicated by petitioner Mondragon to private not insure outright. This was held in Lim v Sun.
respondent Ngo Hing. Instead, on May 6, 1957, Mondragon wrote
back Pacific Life again strongly recommending the approval of the 20- The deposit paid by private respondent shall have to be refunded by
year endowment insurance plan to children, pointing out that since the Pacific Life.
customers were asking for such coverage. 2. Ngo Hing had deliberately concealed the state of health of his
daughter Helen Go. When he supplied data, he was fully aware that
Helen Go died of influenza. Ngo Hing sought the payment of the his one-year old daughter is typically a mongoloid child. He withheld
proceeds of the insurance, but having failed in his effort, he filed the the fact material to the risk insured.
action for the recovery before the Court of First Instance of Cebu, “The contract of insurance is one of perfect good faith uberrima fides
which ruled against him. meaning good faith, absolute and perfect candor or openness and
honesty; the absence of any concealment or demotion, however
Issues: slight.”
1. Whether the binding deposit receipt constituted a temporary The concealment entitles the insurer to rescind the contract of
contract of the life insurance in question insurance.
SATURNINO vs Phil Am Life Vda Canilang v CA G.R. No. 92492 June 17, 1993
J. Feliciano
7 SCRA 316 – Mercantile Law – Insurance Law – Representation –
Concealment – Misrepresentation – Fraud Facts:
Canilang was found to have suffered from sinus tachycardia then
In September 1957, Estefania Saturnino was operated for cancer in
bronchitis after a check-up from his doctor. The next day, he applied
which her right breast was removed. She was advised by her surgeon
for a "non-medical" insurance policy with respondent Grepalife naming
that she’s not totally cured because her cancer was malignant. In
his wife, Thelma Canilang, as his beneficiary. This was to the value of
November 1957, she applied for an insurance policy under Philamlife
P19,700.
(Philippine American Life Insurance Company). She did not disclose
He died of "congestive heart failure," "anemia," and
the fact that she was operated nor did she disclose any medical
"chronic anemia." The widow filed a claim with Great Pacific which the
histories. Philamlife, upon seeing the clean bill of health from Estefania
insurer denied on the ground that the insured had concealed material
waived its right to have Estefania undergo a medical checkup. In
information from it.
September 1958, Estefania died of pneumonia secondary to
Petitioner then filed a complaint against Great Pacific for recovery of
influenza. Her heirs now seek to enforce the insurance claim.
the insurance proceeds. Petitioner testified that she was not aware of
ISSUE: Whether or not Saturnino is entitled to the insurance claim. any serious illness suffered by her late husband and her husband had
died because of a kidney disorder. The doctor who gave the check up
HELD: No. The concealment of the fact of the operation is fraudulent.
stated that he treated the deceased for “sinus tachycardia” and "acute
Even if, as argued by the heirs, Estefania never knew she was
bronchitis."
operated for cancer, there is still fraud in the concealment no matter
Great Pacific presented a physician who testified that the deceased's
what the ailment she was operated for. Note also that in order to avoid
insurance application had been approved on the basis of his medical
a policy, it is not necessary that actual fraud be established otherwise declaration. She explained that as a rule, medical examinations are
insurance companies will be at the mercy of any one seeking required only in cases where the applicanthas indicated in
insurance.
his application for insurance coverage that he has previously
In this jurisdiction a concealment, whether intentional or unintentional, undergone medical consultation and hospitalization.
entitles the insurer to rescind the contract of insurance, concealment The Insurance Commissioner ordered Great Pacific to pay P19,700
being defined as “negligence to communicate that which a party plus legal interest and P2,000.00 as attorney's fees. On appeal by
knows and ought to communicate.” Great Pacific, the Court of Appeals reversed. It found that the failure
of Jaime Canilang to disclose previous medical consultation and
Also, the fact that Philamlife waived its right to have Estefania undergo treatment constituted material information which should have been
a medical examination is not negligence. Because of Estefania’s communicated to Great Pacific to enable the latter to make proper
concealment, Philamlife considered medical checkup to be no longer inquiries.
necessary. Had Philamlife been informed of her operation, she would Hence this petition by the widow.
have been made to undergo medical checkup to determine her
insurability. Issue: Won Canilang was guilty of misrepresentation

Held: Yes. Petition denied.

Ratio: The Insurance Commissioner had also ruled that the failure of Great
There was a right of the insurance company to rescind the contract if Pacific to convey certain information to the insurer was not
it was proven that the insured committed fraud in not affirming that he "intentional" in nature, for the reason that Canilang believed that he
was treated for heart condition and other ailments stipulated. was suffering from minor ailment like a common cold. Section 27
Apart from certifying that he didn’t suffer from such a condition, stated that:
Canilang also failed to disclose in the that he had twice consulted a Sec. 27. A concealment whether intentional or unintentional entitles
doctor who had found him to be suffering from "sinus tachycardia" and the injured party to rescind a contract of insurance.
"acute bronchitis." The failure to communicate must have been intentional rather than
Under the Insurance Code: inadvertent. Canilang could not have been unaware that his heart beat
would at times rise to high and alarming levels and that he had
Sec. 26. A neglect to communicate that which a party knows and ought consulted a doctor twice in the two (2) months before applying for non-
to communicate, is called a concealment. medical insurance. Indeed, the last medical consultation took place
Sec. 28. Each party to a contract of insurance must communicate to just the day before the insurance application was filed. In all
the other, in good faith, all factors within his knowledge which are probability, Jaime Canilang went to visit his doctor precisely because
material to the contract and as to which he makes no warranty, and of the ailment.
which the other has not the means of ascertaining. Canilang's failure to set out answers to some of the questions in the
insurance application constituted concealment.
The information concealed must be information which the concealing
party knew and should have communicated. The test of materiality of Sunlife v CA G.R. No. 105135 June 22, 1995
such information is contained in Section 31: J. Quiason

Sec. 31. Materiality is to be determined not by the event, but solely by Facts:
the probable and reasonable influence of the facts upon the party to Robert John B. Bacani procured a life insurance contract for himself
whom the communication is due, in forming his estimate of the from Sunlife. He was issued a policy for P100,000.00, with double
disadvantages of the proposed contract, or in making his inquiries. indemnity in case of accidental death. The designated beneficiary was
The information which Jaime Canilang failed to disclose was material his mother, Bernarda Bacani.
to the ability of Great Pacific to estimate the probable risk he presented The insured died in a plane crash. Respondent Bernarda Bacani filed
as a subject of life insurance. Had he disclosed his visits to his doctor, a claim with petitioner, seeking the benefits of the insurance policy
the diagnosis made and medicines prescribed by such doctor, in the taken by her son. Petitioner conducted an investigation and its findings
insurance application, it may be reasonably assumed that Great prompted it to reject the claim.
Pacific would have made further inquiries and would have probably
refused to issue a non-medical insurance policy. Sunlife informed Bacani that the insured did not disclose material facts
relevant to the issuance of the policy, thus rendering the contract of
Materiality relates rather to the "probable and reasonable influence of insurance voidable. A check representing the total premiums paid in
the facts" upon the party to whom the communication should have the amount of P10,172.00 was attached to said letter.
been made, in assessing the risk involved in making or omitting to Petitioner claimed that the insured gave false statements in
make further inquiries and in accepting the application for insurance; his application. The deceased answered claimed that he consulted a
that "probable and reasonable influence of the facts" concealed must, Dr. Raymundo of the Chinese General Hospital for cough and
of course, be determined objectively, by the judge ultimately. flu complications. The other questions were answered in the negative.
Petitioner discovered that two weeks prior to his application for The information which the insured failed to disclose were material and
insurance, the insured was examined and confined at the Lung Center relevant to the approval and issuance of the insurance policy. The
of the Philippines, where he was diagnosed for renal failure. During matters concealed would have definitely affected petitioner's action on
his confinement, the deceased was subjected to urinalysis tests. his application, either by approving it with the corresponding
Bernarda Bacani and her husband filed an action for specific adjustment for a higher premium or rejecting the same. Moreover, a
performance against petitioner with the RTC. The court ruled in favor disclosure may have warranted a medical examination of the insured
of the spouses and ordered Sunlife to pay P100,000.00. by petitioner in order for it to reasonably assess the risk involved in
accepting the application.
In ruling for private respondents, the trial court concluded that the facts Vda. de Canilang v. Court of Appeals- materiality of the information
concealed by the insured were made in good faith and under a belief withheld does not depend on the state of mind of the insured. Neither
that they need not be disclosed. The court also held that the medial does it depend on the actual or physical events which ensue.
history was irrelevant because it wasn’t medical insurance. “Good faith" is no defense in concealment. The insured's failure to
The Court of Appeals affirmed the decision of the trial court. The disclose the fact that he was hospitalized raises grave doubts about
appellate court ruled that petitioner cannot avoid its obligation by his eligibility. Such concealment was deliberate on his part.
claiming concealment because the cause of death was unrelated to The argument, that petitioner's waiver of the medical examination of
the facts concealed by the insured. Petitioner's motion for the insured debunks the materiality of the facts concealed, is
reconsideration was denied. Hence, this petition. untenable.
Saturnino v. Philippine American Life Insurance " . . . the waiver of a
Issue: WON the insured was guilty of misrepresentation which made medical examination [in a non-medical insurance contract] renders
the contract void. even more material the information required of
the applicant concerning previous condition of health and diseases
Held: Yes. Petition dismissed. suffered, for such information necessarily constitutes an important
factor which the insurer takes into consideration in deciding whether
Ratio: to issue the policy or not . . . "
Section 26 of The Insurance Code required a party to a contract of Anent the finding that the facts concealed had no bearing to the cause
insurance to communicate to the other, in good faith, all facts within of death of the insured, it is well settled that the insured need not die
his knowledge which are material to the contract and as to which he of the disease he had failed to disclose to the insurer. It is sufficient
makes no warranty, and which the other has no means of ascertaining. that his non-disclosure misled the insurer in forming his estimates of
“A neglect to communicate that which a party knows and ought to the risks of the proposed insurance policy or in making inquiries as
communicate, is called concealment.” held in Henson.

“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
communication is due, in forming his estimate of the disadvantages of
the proposed contract or in making his inquiries.”

The terms of the contract are clear. The insured is specifically required
to disclose to the insurer matters relating to his health.
Philamcare v CA G.R. No. 125678. March 18, 2002 Section 3 states: every person has an insurable interest in the life and
J. Ynares-Santiago health:
(1) of himself, of his spouse and of his children.
Facts: In this case, the husband’s health was the insurable interest. The
Ernani Trinos applied for a health care coverage with Philam. He health care agreement was in the nature of non-life insurance, which
answered no to a question asking if he or his family members were is primarily a contract of indemnity. The provider must pay for the
treated to heart trouble, asthma, diabetes, etc. medical expenses resulting from sickness or injury.
The application was approved for 1 year. He was also given While petitioner contended that the husband concealed materialfact of
hospitalization benefits and out-patient benefits. After the period his sickness, the contract stated that:
expired, he was given an expanded coverage for Php 75,000. During “that any physician is, by these presents, expressly authorized to
the period, he suffered from heart attack and was confined at MMC. disclose or give testimony at anytime relative to any information
The wife tried to claim the benefits but the petitioner denied it saying acquired by him in his professional capacity upon any question
that he concealed his medical history by answering no to the affecting the eligibility for health care coverage of the Proposed
aforementioned question. She had to pay for the hospital bills Members.”
amounting to 76,000. Her husband subsequently passed away. She
filed a case in the trial court for the collection of the amount plus This meant that the petitioners required him to sign authorization to
damages. She was awarded 76,000 for the bills and 40,000 for furnish reports about his medical condition. The contract also
damages. The CA affirmed but deleted awards for damages. Hence, authorized Philam to inquire directly to his medical history.
this appeal. Hence, the contention of concealment isn’t valid.

Issue: WON a health care agreement is not an insurance contract; They can’t also invoke the “Invalidation of agreement” clause where
hence the “incontestability clause” under the Insurance Code does not failure of the insured to disclose information was a grounds for
apply. revocation simply because the answer assailed by the company was
the heart condition question based on the insured’s opinion. He wasn’t
Held: No. Petition dismissed. a medical doctor, so he can’t accurately gauge his condition.

Ratio: Henrick v Fire- “in such case the insurer is not justified in relying upon
Petitioner claimed that it granted benefits only when the insured is such statement, but is obligated to make further inquiry.”
alive during the one-year duration. It contended that there was no Fraudulent intent must be proven to rescind the contract. This was
indemnification unlike in insurance contracts. It supported this claim incumbent upon the provider.
by saying that it is a health maintenance organization covered by the
DOH and not the Insurance Commission. Lastly, it claimed that the “Having assumed a responsibility under the agreement, petitioner is
Incontestability clause didn’t apply because two-year and not one- bound to answer the same to the extent agreed upon. In the end, the
year effectivity periods were required. liability of the health care provider attaches once the member is
hospitalized for the disease or injury covered by the agreement or
Section 2 (1) of the Insurance Code defines a contract of insurance as whenever he avails of the covered benefits which he has prepaid.”
“an agreement whereby one undertakes for a consideration to Section 27 of the Insurance Code- “a concealment entitles the injured
indemnify another against loss, damage or liability arising from an party to rescind a contract of insurance.”
unknown or contingent event.” As to cancellation procedure- Cancellation requires certain
conditions:
1. Prior notice of cancellation to insured; The trial court rendered judgment ordering defendant to pay plaintiff
2. Notice must be based on the occurrence after effective date of the sum of P10,000.00, plus P2,000.00 as attorney's fees. The Court
the policy of one or more of the grounds mentioned; of Appeals reversed the decision of the trial court, holding that the
3. Must be in writing, mailed or delivered to the insured at the insured was guilty of concealment of material facts. Hence the present
address shown in the policy; petition.
4. Must state the grounds relied upon provided in Section 64 of the Issue: Whether or not the insured is guilty of concealment of
Insurance Code and upon request of insured, to furnish facts on some facts material to the risk insured that consequently avoids
which cancellation is based the policy.
None were fulfilled by the provider.
As to incontestability- The trial court said that “under the title Claim Held: Yes. Petition dismissed.
procedures of expenses, the defendant Philamcare Health Systems
Inc. had twelve months from the date of issuance of Ratio:
the Agreement within which to contest the membershipof the patient if The first confinement took place from January 29, 1950 to February 11, while
he had previous ailment of asthma, and six months from the issuance his application was submitted on September 5, 1950. When he gave
of the agreement if the patient was sick of diabetes or hypertension. his answers to the policy, he concealed the ailment of which he was treated in
the hospital. The negative answers given by the insured regarding his
The periods having expired, the defense of concealment or previous ailment deprived defendant of the opportunity to make the necessary
misrepresentation no longer lie.” inquiry as to the nature of his past illness so that as it may form its estimate
relative to the approval of his application. Had defendant been given such
Yu v CA G.R. No. L-12465 May 29, 1959 opportunity, the company would probably had never consented to the
J. Bautista issuance of the policy in question. In fact, according to the death certificate,
the insured’s death may have direct connection with his previous illness.
Facts:
Yu Pang Eng submitted application for insurance consisting of the Under the law, a neglect to communicate that which a party knows and ought
medical declaration made by him to the medical examiner and the to communicate, is called concealment.
report. Yu then paid the premium in the sum of P591.70. This entitles the insurer to rescind the contract. The insured is required to
The insured, in his application for insurance, said “no” to ever having communicate to the insurer all facts within his knowledge which are material
stomach disease, cancer, and fainting-spells. He also claimed to not to the contract and which the other party has not the means of ascertaining.
have consulted a physician regarding such diseases. The materiality is to be determined not by the event but solely by the probable
After submitting the form, he entered the hospital where he and reasonable influence of the facts upon the party to whom the
complained of dizziness, anemia, abdominal pains and tarry stools. communication is due.
He was found to have peptic ulcer.
The insured entered another hospital for medical treatment but he died Argente vs. West Coast-
of "infiltrating medullary carcinoma, Grade 4, advanced cardiac and of
“One ground for the rescission of a contract of insurance under the insurance
lesser curvature, stomach metastases spleen." Act is "a concealment", which in section 25 is defined "A neglect to
Yu Pang Cheng aimed to collect P10,000.00 on life of one Yu Pang communicate that which a party knows and ought to communicate." “In an
Eng from an insurance company. action on a life insurance policy where the evidence conclusively shows that
The company set up the defense that the insured was guilty of the answers to questions concerning diseases were untrue, the truth or falsity
misrepresentation and concealment of material facts. They of the answers become the determining factor. If the policy was procured by
subsequently refused to give the indemnity. fraudulent representations, the contract of insurance was never legally
existent. It can fairly be assumed that had the true facts been disclosed by the > Municipal court of Manila found for Collado and Insular filed an
assured, the insurance would never have been granted.” appeal with CFI of Manila. CFI rendered judgment in favor of Insular
and dismissed Collado’s complaint.

Colado v. Insular Life - Tender of Overdue Payments

Issue:
51 OG (No 12) 6269

Facts:
Whether or nor Insular life was estopped and could no longer cancel
> Vivencio Collado applied for an insurance contract with Insular life the contract due to the fact that it accepted the tender of overdue
in 1948. His application was approved and he began started making payments from Vivencio.
premium payments. However, he defaulted and the insurance was
cancelled.
> He then applied for the reinstatement of his insurance policy in Nov. Held:
of 1951 and tendered the amount of premium for the years 1950-1951.
> He stated that he was as of Nov. 1951 of good health, and that he NO.
had no injuries, ailments or illnesses and had not been sick for any
It is enormously clear that when the deceased applied for a
case since 1948 (his medical check up when he applied for insurance)
reinstatement of his policy in Nov. 1951, he had already been afflicted
and that he had not consulted any physician or practitioner for any
with the fatal ailment for a period of about four months. Furthermore,
case since the date of such latest medical exam.
in submitting together with his application for reinstatement, a health
> However, when Vivencio applied for the reinstatement, he was statement to the effect that he was in good health, Vivencio concealed
already sick of a fatal disease known as carcinoma of the liver and that the material fact that he had consulted a doctor and was then found to
4 days prior to his application for insurance, he consulted a doctor be afflicted with the malady.
regarding his condition.
> The reinstatement was approved. Vivencio again failed to pay the
The acceptance of Insular life of the overdue premiums did not
premiums for the last quarter of Nov. 1951 and as such, Insular life
necessarily deprive it of the right to cancel the policy in case of default
sent him a notice canceling the policy.
incurred by the Insured in the payment of future premiums. The case
> Vivencio then died. The beneificiaries instituted the present action would be different had the insured died at any time after the payment
to recover from Insular life the death benefits of a life insurance policy of overdue premiums but previous to the reinstatement of the policy,
valued at 2T. Insular refused to pay claiming concealment on the part for the, Insular, by its acceptance of its overdue premiums is deemed
of Vivencio. to have waived its right to rescind the policy.

> Collado contends that Insular life had waived the right to rescine the
policy in view of its repeated acceptance of the overdue premiums for
The evidence at hand shows that insofar as the payment of the last
the second and third years.
quarterly premium for 1951 was concerned, Insular had availed of the
right to rescind the policy by notifying the Insured that the policy had The fact that the insured did not read the application which he signed,
lapsed. 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.

Insular life vs Serafin Feliciano

73 Phil. 201 (40 Off. Gaz. 2842) – Mercantile Law – Insurance Law –
Representation – Insurance Agent’s Fraud
Evaristo Feliciano was issued an insurance policy by Insular Life. In
September 1935, he died. His heirs (Serafin Feliciano et al) filed an
insurance claim but Insular Life denied the application as it averred
that Feliciano’s application was attended by fraud. It was later found
in court that the insurance agent and the medical examiner of Insular
Life who assisted Feliciano in signing the application knew that
Feliciano was already suffering from tuberculosis; that they were
aware of the true medical condition of Feliciano yet they still made it
appear that he was healthy in the insurance application form; that
Feliciano signed the application in blank and the agent filled the
information for him.
ISSUE: Whether or not Insular Life can avoid the insurance policy by
reason of the fact that its agent knowingly and intentionally wrote down
the answers in the application differing from those made by Feliciano
hence instead of serving the interests of his principal, acts in his own
or another’s interest and adversely to that of his principal.
HELD: No. Insular Life must pay the insurance policy. 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.