Commercial Law

Insular Life Assurance Co., Ltd. vs Serafin Feliciano (1941)

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G.R. No. L-47593 – 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;┬áthat 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.

The fact that the insured did not read the application which he signed, is not indicative of bad faith. It has been held that it is not negligence for the insured to sign an application without first reading it if the insurer by its conduct in appointing the agent influenced the insured to place trust and confidence in the agent.

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Read the decision on Motion for Reconsideration here (1943).

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