1. REPUBLIC v. (WON) SUNLIFE ASSURANCE COMPANY OF CANADA, GR NO.

158085, 2005-10-14
Facts:
Sun Life is a mutual life insurance company organized and existing under the laws of Canada. It is registered and authorized by the Securities
and Exchange Commission and the Insurance Commission to engage in business in the Philippines as a mutual life insurance... company with
principal office at Paseo de Roxas, Legaspi Village, Makati City. Sun Life filed with the [Commissioner of Internal Revenue] (CIR) its insurance
premium tax return for the third quarter of 1997 and paid the premium tax in the amount. On December 29, 1997, the [Court of Tax Appeals]
(CTA) rendered its decision in Insular Life Assurance Co. Ltd. v. [CIR], which held that mutual life insurance companies are purely cooperative
companies and are exempt from the payment of premium tax and DST.Hence, on August 20, 1999, Sun Life filed with... the CIR an
administrative claim for tax credit of its alleged erroneously paid premium tax and DST for the aforestated tax periods.For failure of the CIR
to act upon the administrative claim for tax credit and with the 2-year period to file a claim for tax credit or refund dwindling away and
about to expire, Sun Life filed with the CTA a petition for review. In its petition, it prayed... for the issuance of a tax credit certificate...
representing... erroneously paid premium tax for the third quarter of 1997... and... of DST on policies of insurance from August 21 to
December 18, 1997.the CTA found in favor of Sun Life. Seeking reconsideration of the decision of the CTA, the CIR argued that Sun Life ought
to have registered, foremost, with the Cooperative Development Authority before it could enjoy the exemptions from premium tax and DST
extended to purely cooperative companies or associations For its failure to register, it could not avail of the exemptions prayed for.
Notwithstanding these arguments, the CTA denied the CIR's motion for reconsideration. Ruling of the Court of Appeals. In upholding the
CTA, the CA reasoned that respondent was a purely cooperative corporation duly licensed to engage in mutual life insurance business in the
Philippines. Thus, respondent was deemed exempt from premium and documentary stamp taxes, because its affairs are managed... and
conducted by its members with money collected from among themselves, solely for their own protection, and not for profit. Hence, this
Petition.
Issues:
Whether Respondent Is a Cooperative
Whether CDA Registration Is Necessary
Ruling:
Having satisfactorily proven to the Court of Tax Appeals, to the Court of Appeals and to this Court that it is a bona fide cooperative,
respondent is entitled to exemption from the payment of taxes on life insurance premiums and documentary stamps. Not being... governed
by the Cooperative Code of the Philippines, it is not required to be registered with the Cooperative Development Authority in order to avail
itself of the tax exemptions. Significantly, neither the Tax Code nor the Insurance Code mandates this administrative... registration.
The Petition has no merit.
The Tax Code defines a cooperative as an association "conducted by the members thereof with the money collected from among
themselves and solely for their own protection and not for profit."[8] Without a doubt, respondent is a cooperative engaged in a... mutual
life insurance business.
First, it is managed by its members. Both the CA and the CTA found that the management and affairs of respondent were conducted by its
member-policyholders.[9]
Second, it is operated with money collected from its members. Since respondent is composed entirely of members who are also its
policyholders, all premiums collected obviously come only from them.
Third, it is licensed for the mutual protection of its members, not for the profit of anyone.
Under the Tax Code although respondent is a cooperative, registration with the Cooperative Development Authority (CDA)[45] is not
necessary in order for it to be exempt from the payment of both percentage taxes on insurance premiums, under Section 121; and...
documentary stamp taxes on policies of insurance or annuities it grants, under Section 199.

2. Rizal Surety v CA G.R. No. 112360. July 18, 2000

J. Purisima
Facts:
Rizal Surety issued a 1 million peso fire insurance policy with Transworld. This was increased to 1.5 million. A four span building was part of
the policy. A fire broke out and gutted the building, together with a two storey building behind it were gaming machines were stored. The
company filed its claims but to no avail. Hence, it brought a suit in court. It aimed to make Rizal pay for almost 3 million including legal
interest and damages. Rizal claimed that the policy only covered damage on the four span building and not the two storey building. The trial
court ruled in Transworld’s favor and ordered Rizal to pay actual damages only. The court of appeals increased the damages. The insurance
company filed a MFR. The CA answered by modifying the imposition of interest. Not satisfied, the insurance company petitioned to the
Supreme Court.
Issue:
WON Rizal Surety is liable for loss of the two-storey building considering that the fire insurance policy sued upon covered only the
contents of the four-span building.
Held: Yes. Petition dismissed.
Ratio: The policy had clauses on the building coverage that read: "contained and/or stored during the currency of this Policy in the premises
occupied by them forming part of the buildings situated within own Compound"
"First, said properties must be contained and/or stored in the areas occupied by Transworld and second, said areas must form part of the
building described in the policy xxx"
This generally means that the policy didn’t limit its coverage to what was stored in the four-span building.
As to questions of fact, both the trial court and the Court of Appeals found that the so called "annex " was not an annex building but an
integral part of the four-span building described in the policy and consequently, the machines and spare parts stored were covered by the
fire insurance.
A report said: "Two-storey building constructed of partly timber and partly concrete hollow blocks under g.i. roof which is adjoining and
intercommunicating with the repair of the first right span of the lofty storey building and thence by property fence wall."
"Art.1377. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity"
Landicho v GSIS- the 'terms in an insurance policy, which are ambiguous, equivocal, or uncertain are to be construed strictly and most
strongly against the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured’
The issue of whether or not Transworld has an insurable interest in the fun and amusement machines and spare parts, which entitles it to
be indemnified for the loss thereof, had been settled in another SC case.
 3. Philamcare v CA G.R. No. 125678. March 18, 2002
J. Ynares-Santiago
Facts:
Ernani Trinos applied for a health care coverage with Philam. He answered no to a question asking if he or his family members were treated
to heart trouble, asthma, diabetes, etc.
The application was approved for 1 year. He was also given hospitalization benefits and out-patient benefits. After the period expired, he
was given an expanded coverage for Php 75,000. During the period, he suffered from heart attack and was confined at MMC. The wife tried
to claim the benefits but the petitioner denied it saying that he concealed his medical history by answering no to the aforementioned
question. She had to pay for the hospital bills amounting to 76,000. Her husband subsequently passed away. She filed a case in the trial
court for the collection of the amount plus damages. She was awarded 76,000 for the bills and 40,000 for damages. The CA affirmed but
deleted awards for damages. Hence, this appeal.

Issue: WON a health care agreement is not an insurance contract; hence the “incontestability clause” under the Insurance Code does not
apply.

Held: No. Petition dismissed.

Ratio: Petitioner claimed that it granted benefits only when the insured is alive during the one-year duration. It contended that there was
no indemnification unlike in insurance contracts. It supported this claim by saying that it is a health maintenance organization covered by
the DOH and not the Insurance Commission. Lastly, it claimed that the Incontestability clause didn’t apply because two-year and not one-
year effectivity periods were required.
Section 2 (1) of the Insurance Code defines a contract of insurance as “an agreement whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown or contingent event.”
Section 3 states: every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children.
In this case, the husband’s health was the insurable interest. The health care agreement was in the nature of non-life insurance, which is
primarily a contract of indemnity. The provider must pay for the medical expenses resulting from sickness or injury.
While petitioner contended that the husband concealed materialfact of his sickness, the contract stated that:
“that any physician is, by these presents, expressly authorized to disclose or give testimony at anytime relative to any information acquired
by him in his professional capacity upon any question affecting the eligibility for health care coverage of the Proposed Members.”
This meant that the petitioners required him to sign authorization to furnish reports about his medical condition. The contract also
authorized Philam to inquire directly to his medical history.
Hence, the contention of concealment isn’t valid.
They can’t also invoke the “Invalidation of agreement” clause where failure of the insured to disclose information was a grounds for
revocation simply because the answer assailed by the company was the heart condition question based on the insured’s opinion. He wasn’t
a medical doctor, so he can’t accurately gauge his condition.
Henrick v Fire- “in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry.”
Fraudulent intent must be proven to rescind the contract. This was incumbent upon the provider.
“Having assumed a responsibility under the agreement, petitioner is bound to answer the same to the extent agreed upon. In the end, the
liability of the health care provider attaches once the member is hospitalized for the disease or injury covered by the agreement or whenever
he avails of the covered benefits which he has prepaid.”
Section 27 of the Insurance Code- “a concealment entitles the injured party to rescind a contract of insurance.”
As to cancellation procedure- Cancellation requires certain conditions:
1. Prior notice of cancellation to insured;
2. Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned;
3. Must be in writing, mailed or delivered to the insured at the address shown in the policy;
4. Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on
which cancellation is based
None were fulfilled by the provider.
As to incontestability- The trial court said that “under the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc.
had twelve months from the date of issuance of the Agreement within which to contest the membership of the patient if he had previous
ailment of asthma, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. The periods
having expired, the defense of concealment or misrepresentation no longer lie.”
4. PHILIPPINE HEALTH CARE PROVIDERS v. CIR, GR No. 167330, 2008-06-12
Facts:
Petitioner essentially argues that its health care agreement is not a contract of insurance but a contract for the provision on a prepaid basis
of medical services, including medical check-up, that are not based on loss or damage. Petitioner also insists that it is not engaged... in the
insurance business. It is a health maintenance organization regulated by the Department of Health, not an insurance company under the
jurisdiction of the Insurance Commission. For these reasons, petitioner asserts that the health care agreement is not subject to
DST.
Issues:
Is a health care agreement in the nature of an insurance contract and therefore subject to the documentary stamp tax (DST) imposed under
Section 185 of Republic Act 8424 (Tax Code of 1997)?
Ruling:
We do not agree.
The DST is levied on the exercise by persons of certain privileges conferred by law for the creation, revision, or termination of specific legal
relationships through the execution of specific instruments.
an excise upon the privilege,... opportunity, or facility offered at exchanges for the transaction of the business.
the DST under Section 185 of the 1997 Tax Code is imposed on the privilege of making or renewing any policy of insurance (except life,
marine,... inland and fire insurance), bond or obligation in the nature of indemnity for loss, damage, or liability.
Petitioner's health care agreement is primarily a contract of indemnity.
Principles:
 5.Grepalife v. CA
Facts: A contract of group life insurance was executed between petitioner and DBP wherein the former agreed to insure the lives of eligible
housing loan mortgages of the latter. Dr. Leuterio was one of those who applied for membership in the said insurance plan. In
the applicationfor, when asked whether he is suffering from any physical impairment, heanswered in the negative; and when asked whether
he is good health to the best of his knowledge, he answered in the affirmative. Petitioner approved the application and issued the
corresponding certificate. Dr. Leuterio died due to “massive cerebral hemorrhage”. When DBP submitted a claim to petitioner, it was denied
on the ground that Dr. Leuterio was not physically healthy when he applied for an insurance coverage and that he did not disclose he had
been suffering from hypertension. Allegedly such non-disclosure constituted concealment. The widow of Dr. Leuterio filed a complaint
against petitioner for specific performance with damages.

Issues:
1) Is the widow of the insured-mortgagor a real party in interest in a claim under the life insurance contract?
2) Is there concealment that will vitiate the insurance contract?
3) Can the mortgagor of DBP hold the insurer liable without proof of the actual outstanding mortgage payable?

Held: 1) Yes. Where the mortgagor pays the insurance premium under the group insurance policy, making the loans payable to the
mortgagee, the insurance is on the mortgagor’s interest (because (a) the proceeds will be applied to the payment of mortgage debt, thereby
relieving the heirs of mortgagor from paying the obligation; and (b) in the event of death, the mortgage obligation will be extinguished by
theapplication of insurance proceeds to mortgage indebtedness), and the mortgagor continues to be a party to the contract. In this type of
policy insurance, the mortgagee is simply an appointee of the insurance fund, such loss-payable clause does not make the mortgagee a party
to the contract.

And since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest
or not, and such person may recover it whatever the incurred might have recovered, the widow of Dr. Leuterio may file the suit against the
insurer Grepalife.

2) No. Concealment exists where the assured had knowledge of a fact material to the risk, and with honesty, good faith and fair dealing
requires that he should communicate it to the assured, but he designedly and intentionally withheld the same.

The fraudulent intent on the part of the insured need be established toentitle the insurers to rescind the contract. Misrepresentation as the
defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing
evidence rests upon the insurer. In the case at bar, the petitioner failed to clearly and satisfactorily establish its defense, and is therefore
liable to pay the proceeds of the insurance.

3) Yes. A life insurance is a valued policy. Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure
of indemnity under a policy of insurance upon life or death is the sum fixedin the policy.
6. Enriquez v. SunLife- Insurance Policy
41 PHIL 269
Facts:
> On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for life annuity.
> 2 days later, he paid the sum of 6T to the company’s anager in its Manila office and was given a receipt.
> On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the same date, the Manila office prepared a letter
notifying Herrer that his application has been accepted and this was placed in the ordinary channels of transmission, but as far as known
was never actually mailed and never received by Herrer.
> Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrer’s estate brought this action to recover the 6T paid by the deceased.

Issue: Whether or not the insurance contract was perfected.

Held: NO. The contract for life annuity was NOT perfected because it had NOT been proved satisfactorily that the acceptance of the
application ever came to the knowledge of the applicant. An acceptance of an offer of insurance NOT actually or constructively
communicated to the proposer does NOT make a contract of insurane, as the locus poenitentiae is ended when an acceptance has passed
beyond the control of the party.

NOTE: Life annuity is the opposite of a life insurance. In life annuity, a big amount is given to the insurance company, and if after a certain
period of time the insured is stil living, he is entitled to regular smaller amounts for the rest of his life. Examples of Life annuity are
pensions. Life Insurance on the other hand, the insured during the period of the coverage makes small regular payments and upon his
death, the insurer pays a big amount to his beneficiaries.

7. ETERNAL GARDENS MEMORIAL PARK CORPORATION vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY
Facts: Respondent Philamlife entered into an agreement denominated as Creditor Group Life Policy with petitioner. Under the policy, the
clients of Eternal who purchased burial lots from it on installment basis would be insured by Philamlife. Among those insured was John
Chuang who died with a balance of payments pf PhP100,000.00. More than a year after complying with the required documents, Philamlife
had not furnished Eternal with any reply to the latter’s insurance claim. This prompted Eternal to demand from Philamlife the payment of
the claim for PhP 100,000 on April 25, 1986. Only then did Philamlife respond that the deceased was not covered by the Policy.
The RTC said that since the contract is a group life insurance, once proof of death is submitted, payment must follow. The CA ruled that the
non-accomplishment of the submitted application form violated Section 26 of the Insurance Code. Thus, the CA concluded, there being no
application form, Chuang was not covered by Philamlifes insurance.
Issue: May the inaction of the insurer on the insurance application be considered approval of the application?
Ruling: Yes. As earlier stated, Philamlife and Eternal entered into an agreement denominated as Creditor Group Life Policy No. P-1920 dated
December 10, 1980. In the policy, it is provided that:
EFFECTIVE DATE OF BENEFIT. The insurance of any eligible Lot Purchaser shall be effective on the date he contracts a loan with the Assured.
However, there shall be no insurance if the application of the Lot Purchaser is not approved by the Company.

An examination of the above provision would show ambiguity between its two sentences. A contract of insurance, being a contract of
adhesion, par excellence, any ambiguity therein should be resolved against the insurer. Moreover, the mere inaction of the insurer on the
insurance application must not work to prejudice the insured; it cannot be interpreted as a termination of the insurance contract. The
termination of the insurance contract by the insurer must be explicit and unambiguous.

8. Pacific Timber V. CA (1982)

G.R. No. L-38613 February 25, 1982
Lessons Applicable: Rules on cover notes (if premium CANNOT yet be computed) (Insurance)
Laws Applicable: Section 84 of the Insurance Code

FACTS:
 March 19, l963: Pacific Timber secured temporary insurance from Workmen's Insurance Company, Inc. for its exportation of
1,250,000 board feet of Philippine Lauan and Apitong logs to be shipped from the Diapitan Bay, Quezon Province to Tokyo, Japan.
 Workmen's issued Cover Note insuring the cargo "Subject to the Terms and Conditions of the Workmen's Insurance Company,
Inc."
 April 2, 1963: regular marine cargo policies were issued for a total of 1,195.498 bd. ft. Due to the bad weather some of the logs
were lost during loading operations. 45 pieces of logs were salvaged, but 30 pieces were lost. Pacific informed Workmen's who
refused stating that the logs covered in the 2 marine policies were received in good order at the point of destination and that the
cover note was null and void upon the issuance of the Marine Policies
 CFI: cover note is valid
 CA: reversed
ISSUE: W/N the cover note is valid despite the absence of premium payment upon it
HELD: YES. CA set aside. CFI reinstated
 it was not necessary to ask for payment of the premium on the Cover Note , for the loss insured against having already occurred,
the more practical procedure is simply to deduct the premium from the amount due on the Cover Note
 Had all the logs been lost during the loading operations, but after the issuance of the Cover Note, liability on the note would have
already arisen even before payment of premium
 cover note as a "binder"
 supported by the doctrine that where a policy is delivered without requiring payment of the premium, the
presumption is that a credit was intended and policy is valid
 it sent its adjuster to investigate and assess the loss to determine if petitioner was guilty of delay in communicating the loss but
there was none
 Section 84
 Delay in the presentation to an insurer of notice or proof of loss is waived if caused by any act of his or if he omits to
take objection promptly and specifically upon that ground

9. Commissioner Of Internal Revenue V. Lincoln Philippine Life Insurance Co., Inc (2002)
G.R. No. 119176 March 19, 2002
Lessons Applicable: Measure of Indemnity (Insurance Code)
Laws Applicable: Section 173,Section 183 of the National Internal Revenue Code, Section 49,Section 50 Title VI of the Insurance Code

FACTS:
 Lincoln Philippine Life Insurance Co., Inc., (now Jardine-CMA Life Insurance Company, Inc.) issued a special kind of life insurance
policy known as the "Junior Estate Builder Policy" with a distinguishing feature. It had a "automatic increase clause" upon
attainment of a certain age by the insured.
 Commissioner of Internal Revenue issued deficiency documentary stamps tax assessment for the year 1984 pertaining to the
amount in the automatic increase clause
 Lincoln questioned the deficiency assessments
 Court of Tax Appeals: found no valid basis and cancelled it
 CA: affirmed CTA
 CIR claims that "automatic increase clause" in the subject insurance policy is separate
ISSUE: W/N the "automatic increase clause" should not be taxed with the main policy

HELD: NO. CA set aside

 Section 49, Title VI of the Insurance Code defines an insurance policy as the written instrument in which a contract of insurance
is set forth
 Section 50 of the same Code provides that the policy, which is required to be in printed form, may contain any word, phrase,
clause, mark, sign, symbol, signature, number, or word necessary to complete the contract of insurance.
 any rider, clause, warranty or endorsement pasted or attached to the policy is considered part of such policy or contract of
insurance
  Section 173 that the payment of documentary stamp taxes is done at the time the act is done or transaction had and the tax base
for the computation of documentary stamp taxes on life insurance policies under Section 183 is the amount fixed in policy, unless
the interest of a person insured is susceptible of exact pecuniary measurement
 the amount fixed in the policy is the figure written on its face and whatever increases will take effect in the future by reason of
the "automatic increase clause" embodied in the policy without the need of another contract
 the amount insured by the policy at the time of its issuance necessarily included the additional sum covered by the automatic
increase clause because it was already determinable at the time the transaction was entered into and formed part of the policy
 to claim that the increase in the amount insured (by virtue of the automatic increase clause incorporated into the policy at the
time of issuance) should not be included in the computation of the documentary stamp taxes due on the policy would be a clear
evasion of the law requiring that the tax be computed on the basis of the amount insured by the policy

10. Pineda v Insular G.R. No. 105562 September 27, 1993
J. Davide Jr.
Facts:
PMSI obtained a group insurance policy for its sailors. 6 of the sailors, during the effectivity of the policy, perished while the ship sank in
Morocco. The families of the victims then wanted to claim the benefits of the insurance. Hence, under the advice of Nuval, the president of
PMSI, they executed a special power of attorney authorizing Capt. Nuval to, "follow up, ask, demand, collect and receive" for their benefit
the indemnities. Insular drew against its account 6 checks, four for P200,00.00 each, one for P50,000.00 and another for P40,00.00, payable
to the order the families. The checks were given to PMSI. Nuval, the PMSI president, pocketed the amounts in his bank account.
When the families went to insular to get the benefits, their request was denied because Insular claimed that the checks were already given
to PMSI.
The families filed a petition with the Insurance Commission. They won and Insular was ordered to pay them 500 a day until the amount was
furnished to them. The insurance Commission held that the special powers of attorney executed by complainants do not contain in
unequivocal and clear terms authority to Nuval to obtain and receive from respondent company insurance proceeds arising from the death
of the seaman-insured; also, that Insular Life did not convincingly refuted the claim of Mrs. Alarcon that neither she nor her husband
executed a special power of authority in favor of Capt. Nuval and that it did not observe Sec 180(3), when it released the benefits due to the
minor children of Ayo and Lontok, when the said complainants did notpost a bond as required-
Insular Life appealed to the CA. CA modified the decision of the Insurance Commission, eliminating the award to the minor children. Hence,
this petition by the beneficiary families.
Issues:
1. WON Insular Life should still be liable to the complainants when they relied on the special powers of attorney, which Capt. Nuval presented
as documents, when they released the checks to the latter.
2. WON Insular Life should be liable to the complainants when they released the check in favor of Ayo and Lontok, even if no bond was
posted as required.

Held: Yes to both. Petition granted.

Ratio:
1. The special powers of attorney "do not contain in unequivocal and clear terms authority to Capt. Nuval to obtain, receive, receipt from
respondent company insurance proceeds arising from the death of the seaman-insured.
Insular Life knew that a power of attorney in favor of Capt. Nuval for the collection and receipt of such proceeds was a deviation from its
practice with respect to group policies.
They gave the proceeds to the policyholder instead of the beneficiaries themselves. Even the Isnular rep admitted that he gave the checks
to the policyholder.
Insular Life recognized Capt. Nuval as the attorney-in-fact of the petitioners. However, it acted imprudently and negligently in the premises
by relying without question on the special power of attorney.
Strong vs. Repide- third persons deal with agents at their peril and are bound to inquire as to the extent of the power of the agent with
whom they contract.
Harry E. Keller Electric Co. vs. Rodriguez- The person dealing with an agent must also act with ordinary prudence and reasonable diligence.
Obviously, if he knows or has good reason to believe that the agent is exceeding his authority, he cannot claim protection… the party dealing
with him may not shut his eyes to the real state of the case, but should either refuse to deal with the agent at all, or should ascertain from
the principal the true condition of affairs.
Insular delivered the checks to a party not the agent of the beneficiaries.
2. Art. 225. The father and the mother shall jointly exercise legal guardianship over the property of their unemancipated common child
without the necessity of a court appointment. In case of disagreement, the father's decision shall prevail, unless there is judicial order to the
contrary. Where the market value of the property or the annual income of the child exceeds P50,000, the parent concerned shall be required
to furnish a bond in such amount as the court may determine, but not less than ten per centum (10%) of the value of the property or annual
income, to guarantee the performance of the obligations prescribed for general guardians.
“If the market value of the property or the annual income of the child exceeds P50,000.00, a bond has to be posted by the parents concerned
to guarantee the performance of the obligations of a general guardian.”On group insurance : Group insurance is essentially a single insurance
contract that provides coverage for many individuals, particularly for the employees of one employer. There is a master agreement issued
to an employer. The employer acts as the collector of the dues and premiums. Disbursement of insurance payments by the employer is also
one of his duties.They require an employee to pay a portion of the premium, which the employer deducts from wages while the remainder
is paid by the employer. This is known as a contributory plan as compared to a non-contributory plan where the premiums are solely paid
by the employer.Although the employer may be the policyholder, the insurance is actually for the benefit of the employee. In a non-
contributory plan, the payment by the employer of the entire premium is a part of the total compensation paid for the services of the
employee. The primary aim of group insurance is to provide the employer with a means of procuring insurance protection for his employees
at a low cost and thereby retain their loyalty and efficiency.
11. Insular v Ebrado G.R. No. L-44059 October 28, 1977
Facts:
J. Martin:
Cristor Ebrado was issued by The Life Assurance Co., Ltd., a policy for P5,882.00 with a rider for Accidental Death. He designated Carponia
T. Ebrado as the revocable beneficiary in his policy. He referred to her as his wife.Cristor was killed when he was hit by a failing branch of a
tree. Insular Life was made liable to pay the coverage in the total amount of P11,745.73, representing the face value of the policy in the
amount of P5,882.00 plus the additional benefits for accidental death. Carponia T. Ebrado filed with the insurer a claim for the proceeds as
the designated beneficiary therein, although she admited that she and the insured were merely living as husband and wife without the
benefit of marriage. Pascuala Vda. de Ebrado also filed her claim as the widow of the deceased insured. She asserts that she is the
one entitledto the insurance proceeds. Insular commenced an action for Interpleader before the trial court as to who should be given the
proceeds. The court declared Carponia as disqualified.
Issue: WON a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the proceeds in case of
death of the latter?
Held: No. Petition
Ratio: Section 50 of the Insurance Act which provides that "the insurance shall be applied exclusively to the proper interest of the person in
whose name it is made" The word "interest" highly suggests that the provision refers only to the "insured" and not to the beneficiary, since
a contract of insurance is personal in character. Otherwise, the prohibitory laws against illicit relationships especially on property and
descent will be rendered nugatory, as the same could easily be circumvented by modes of insurance. When not otherwise specifically
provided for by the Insurance Law, the contract of life insurance is governed by the general rules of the civil law regulating contracts. And
under Article 2012 of the same Code, any person who is forbidden from receiving any donation under Article 739 cannot be
named beneficiary of a fife insurance policy by the person who cannot make a donation to him. Common-law spouses are barred from
receiving donations from each other.Article 739 provides that void donations are those made between persons who were guilty of adultery
or concubinage at the time of donation.There is every reason to hold that the bar in donations between legitimate spouses and those
between illegitimate ones should be enforced in life insurance policies since the same are based on similar consideration. So long as marriage
remains the threshold of family laws, reason and morality dictate that the impediments imposed upon married couple should likewise be
imposed upon extra-marital relationship. A conviction for adultery or concubinage isn’t required exacted before the disabilities mentioned
in Article 739 may effectuate. The article says that in the case referred to in No. 1, the action for declaration of nullity may be brought by
the spouse of the donor or donee; and the guilty of the donee may be proved by preponderance of evidence in the same action. The
underscored clause neatly conveys that no criminal conviction for the offense is a condition precedent. The law plainly states that the guilt
of the party may be proved “in the same acting for declaration of nullity of donation.” And, it would be sufficient if evidence preponderates.
The insured was married to Pascuala Ebrado with whom she has six legitimate children. He was also living in with his common-law wife with
whom he has two children.