G.R. No. 47593 , December 29, 1943
THE INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. SERAFIN D. FELICIANO ET AL., respondents.

FACTS

Evaristo Feliciano, who died on September 29, 1935, was suffering from advanced pulmonary tuberculosis when he signed applications for insurance on October 12, 1934. On that same date, his doctor informed his brother that his condition was “very serious and practically hopeless.” In his application, the question “Have you ever suffered from any ailment or disease of the lungs, pleurisy, pneumonia or asthma?” was answered “No.” The application contained a printed declaration by the applicant that the answers were true and that he was a proper subject for life insurance. The false answer was written by the company’s soliciting agent, Romulo M. David, in collusion with the medical examiner, Dr. Gregorio Valdez, to secure the policy’s approval for a sales contest. The Court of Appeals found that the agent bribed the medical examiner with money borrowed from the applicant’s mother. The court also found that before signing, the insured and his family informed the agent and examiner about his sickness, visits to a sanatorium, and X-rays, but were told he was fit for insurance. The policies stipulated that only certain company officials could modify the contract and that the agent had no such authority. The application stated that the declarations were the basis of the policy and that the policy would not take effect until the first premium was paid and the policy was delivered and accepted while the applicant was in good health. The insured accepted the first policy for P20,000 and later applied for and accepted a second for P5,000.

ISSUE

Whether the life insurance policies issued to Evaristo Feliciano are null and void ab initio due to fraudulent procurement.

RULING

Yes. The Supreme Court granted the petitioner’s motion for reconsideration, reversed the Court of Appeals’ judgment, and declared the policies void ab initio. The Court ruled that when the insured signed the application in blank and authorized the agent and medical examiner to write the answers, he made them his agents for that purpose and was responsible for their acts, including falsification. The insured knew he was not in good health or a proper subject for insurance when he signed the application containing contrary representations and when he later accepted the policies. By accepting the policies, he was charged with knowledge of their contents, including the false answers in the attached application, and ratified them. The insured could not in good faith rely on the oral representations of the agent and examiner, as the policies clearly stated they had no power to bind the company. From all facts and circumstances, the Court concluded the insured was a co-participant in the fraudulent procurement of the policies. Consequently, the respondents were only entitled to a refund of the premiums paid, amounting to P1,389, with legal interest from the date of the complaint.