Insular Life v. Feliciano - Concealment

73 PHIL 201

Facts:

>  Evaristo Feliciano filed an application with Insular Life upon the solicitation of one of its agents.

>  It appears that during that time, Evaristo was already suffering from tuberculosis.  Such fact appeared during the medical exam, but the examiner and the company’s agent ignored it.

>  After that, Evaristo was made to sign an application form and thereafter the blank spaces were filled by the medical examiner and the agent making it appear that Evaristo was a fit subject of insurance. (Evaristo could not read and understand English)

>  When Evaristo died, Insular life refused to pay the proceeds because of concealment.

Issue:

Whether or not Insular Life was bound by their agent’s acts.

Held:

Yes.

The insurance business has grown so vast and lucrative within the past century.  Nowadays, even people of modest means enter into insurance contracts.  Agents who solicit contracts are paid large commissions on the policies secured by them.  They act as general representatives of insurance companies.

IN the case at bar, the true state of health of the insured was concealed by the agents of the insurer.  The insurer’s medical examiner approved the application knowing fully well that the applicant was sick.  The situation is one in which of two innocent parties must bear a loss for his reliance upon a third person.  In this case, it is the one who drafted and accepted the policy and consummated the contract.  It seems reasonable that as between the two of them, the one who employed and gave character to the third person as its agent should be the one to bear the loss.  Hence, Insular is liable to the beneficiaries.