Interpretation of insurance contracts

VIOLETA LALICAN vs. THE INSULAR LIFE ASSURANCE COMPANY LIMITED

G.R. No. 183526, August 25, 2009, 597 SCRA 159

FACTS:
Eulogio, the husband of herein petitioner, applied for an insurance policy the value of which is P1,500,000.00. Under the
policy terms, Eulogio is obliged to pay the premiums on a quarterly basis, until the end of the 20-year period of the policy. It
was likewise stated therein that the insured has 31-day grace period for the payment of each premium subsequent to the
first and that default in any payment of said premiums shall result in the automatic lapse of the said policy. Eulogio failed to
pay a premium even after the lapse of the 31-day grace period. Hence, the policy lapsed and became void. He filed an
Application for Reinstatement of said policy and paying the amount of the premium due. However, Insular Life notified him
that they could not fully process his application because the amount he paid is inadequate to cover the accrued interests.
Hence, he again applied for the reinstatement of said policy this time, together with the required amount. The husband of the
insurance agent was the one who received his application because the agent was away at that time. Within the same day,
the insured died. This fact was unknown to the agent who then submitted Eulogios application for reinstatement to the
Insular Life Regional Office.
Violeta then filed a claim for payment of the full proceeds of the policy. However, the company said that she is not entitled to
the insurance proceeds because they claimed that the policy was not reinstated during her husbands lifetime and good
health.

ISSUE:
Whether or not Eulogio was able to reinstate the lapsed insurance policy before his death

HELD:
NO. The Court agrees with the RTC that the conditions for reinstatement under the Policy Contract and Application for
Reinstatement were written in clear and simple language, which could not admit of any meaning or interpretation other than
those that they so obviously embody. Violeta did not adduce any evidence that Eulogio might have failed to fully understand
the import and meaning of the provisions of his Policy Contract and/or Application for Reinstatement both of which he
voluntarily signed. While it is a cardinal principle of insurance law that a policy or contract of insurance is to be construed
liberally in favor of the insured and strictly as against the insurer company, yet, contracts of insurance, like other contracts
are to be construed according to the sense and meaning of the terms, which the parties themselves have used, if such
terms are clear and unambiguous, they must be taken and understood in their plain, ordinary and popular sense.
WHEREFORE, premises considered, the Court DENIES the instant Petition for Review on Certiorari under Rule 45 of the
Rules of Court. The Court AFFIRMS the Orders dated 10 April 2008 and 3 July 2008 of the RTC of Gapan City, Branch 34,
in Civil Case No. 2177, denying petitioner Violeta R. Lalicans Notice of Appeal, on the ground that the Decision dated 30
August 2007 subject thereof, was already final and executor. No costs.
Insurance Case Digest: El Oriente, Fabrica De Tabacos, Inc., V. Posadas (1931)

G.R. No. 34774 September 21, 1931

Lessons Applicable: Pecuniary Interest (Insurance)

FACTS:

March 18, 1925: El Oriente, Fabrica de Tabacos, Inc. in order to protect itself against the loss that it
might suffer by reason of the death of its manager, A. Velhagen, who had more than 35 years of
experience in the manufacture of cigars in the Philippine Islands, and whose death would be a
serious loss procured from the Manufacturers Life Insurance Co., of Toronto, Canada, thru its local
agent E.E. Elser, an insurance policy on the life of A. Velhagen for $50,000
designated itself as the sole beneficiary

Upon the death of A. Velhagen in the year 1929, El Oriente received all the proceeds of the life
insurance policy, together with the interests and the dividends accruing thereon, aggregating
P104,957.88

Collector of Internal Revenue assessed and levied the sum of P3,148.74 as income tax on the
proceeds of the insurance policy which tax El Oriente paid

ISSUE: W/N proceeds of life insurance policies paid to corporate beneficiaries upon the death of the
insured are also exempted

HELD: YES. reversed and favoring El Oriente

In reality, what the plaintiff received was in the nature of an indemnity for the loss which it actually
suffered because of the death of its manager and not taxable income

Labels: 1931, Case Digest, case digst, El Oriente Fabrica de Tabacos Inc v Posadas, G.R. No. 34774,
insurance, insurance case digest, Juris Doctor, pecuniary interest, September 21

Common-law spouse is disqualified to be the beneficiary of insured

THE INSULAR LIFE ASSURANCE COMPANY, LTD. Vs. CARPONIA T. EBRADO

G.R. No. L-44059, 28 October 1977
80 SCRA 181

FACTS:
Buenaventura Ebrado was issued by petitioner company an insurance policy wherein he designated Carponia, his common-
law wife, as his revocable beneficiary.
When Buenaventura died, Carponia filed with the insurer a claim for the proceeds of the policy in the total amount of
P11,745.73.
Pascuala Vda. de Ebrado, Buenaventuras legal wife, likewise filed her claim as the widow of the deceased insured. She
asserts that she is the one entitled to the insurance proceeds, not the common-law wife, Carponia.

ISSUE:
Whether or not a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the
proceeds thereof in case of death of the latter

HELD:
NO. 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 life insurance policy by the person who
cannot make a donation to him. Common-law spouses are, definitely, barred from receiving donations from each other.
In essence, a life insurance policy is no different from a civil donation insofar as the beneficiary is concerned. Both are
founded upon the same consideration: liberality. A beneficiary is like a donee, because from the premiums of the policy
which the insured pays out of liberality, the beneficiary will receive the proceeds or profits of said insurance. As a
consequence, the proscription in Article 739 of the new Civil Code should equally operate in life insurance contracts. The
mandate of Article 2012 cannot be laid aside: any person who cannot receive a donation cannot be named as beneficiary in
the life insurance policy of the person who cannot make the donation. Under American law, a policy of life insurance is
considered as a testament and in construing it, the courts will, so far as possible treat it as a will and determine the effect of
a clause designating the beneficiary by rules under which wins are interpreted.
ACCORDINGLY, the appealed judgment of the lower court is hereby affirmed. Carponia T. Ebrado is hereby declared
disqualified to be the beneficiary of the late Buenaventura C. Ebrado in his life insurance policy. As a consequence, the
proceeds of the policy are hereby held payable to the estate of the deceased insured. Costs against Carponia T. Ebrado
Health Care agreement is in the nature of non-life insurance
Skip to content acts:

> Jose Consuegra was employed as a shop foreman of the Office of the District Engineer in Surigao
Del Norte.

> When he was still alive, he contracted two marriages:

o First Rosario Diaz; 2 children = Jose Consuegra Jr. and Pedro but both predeceased him

o 2nd Basilia Berdin; 7 children. (this was contracted in GF while the first marriage subsisted)

> Being a GSIS member when he died, the proceeds of his life insurance were paid by the GSIS to
Berdin and her children who were the beneficiaries named in the policy.

> Since he was in the govt service for 22.5028 years, he was entitled to retirement insurance
benefits, for which no beneficiary was designated.

> Both families filed their claims with the GSIS, which ruled that the legal heirs were Diaz who is
entitled to one-half or 8/16 of the retirement benefits and Berdin and her children were entitled to
the remaining half, each to receive an equal share of 1/16.

> Berdin went to CFI on appeal. CFI affirmed GSIS decision.

Issue:

To whom should the retirement insurance benefits be paid?

Held:

Both families are entitled to half of the retirement benefits.

The beneficiary named in the life insurance does NOT automatically become the beneficiary in the
retirement insurance. When Consuegra, during the early part of 1943, or before 1943, designated
his beneficiaries in his life insurance, he could NOT have intended those beneficiaries of his life
insurance as also the beneficiaries of his retirement insurance because the provisions on retirement
insurance under the GSIS came about only when CA 186 was amended by RA 660 on June 18, 1951

Sec. 11(b) clearly indicates that there is need for the employee to file an application for retirement
insurance benefits when he becomes a GSIS member and to state his beneficiary. The life insurance
and the retirement insurance are two separate and distinct systems of benefits paid out from 2
separate and distinct funds.

In case of failure to name a beneficiary in an insurance policy, the proceeds will accrue to the estate
of the insured. And when there exists two marriages, each family will be entitled to one-half of the
estate.
Lessons Applicable: Invalid Designation (Insurance)

FACTS:

Roman A. Concepcion listed as his beneficiaries Aquilina Maloles, Roman M. Concepcion, Jr., Estela
M. Concepcion, Rolando M. Concepcion and Robin M. Concepcion for the death benefit of an
association amounting to P2,505

Two sets of claimants presented themselves:

Juanita Golpeo, legal wife and her children, named beneficiaries by the deceased

Marcelino and Josefina Concepcion intervened in their own right aligning themselves Juanita Golpeo
and her minor children

Elsie Hicban, another common law wife and her child

RTC:Aquilina Maloles and her children the sole beneficiaries

Only the Juanita Golpeo and her minor children and the intervenors Marcelino and Josefina
Concepcion have appealed to this court

ISSUE: W/N Aquilina Molales common-law wife and her illegitimate children can claim the benefits

HELD: YES.

Juanita Golpeo, by her silence and actions, had acquiesced in the illicit relations between her
husband and appellee Aquilina Maloles

new Civil Code recognized certain successional rights of illegitimate children

Separate Opinions:

REYES, J.B.L., J., concurring

I concur in the result for the reason that the contract here involved was perfected before the new
Civil Code took effect, and hence its provisions cannot be made to apply retroactivelyPERSONS AND
FAMILY RELATIONS

HOME

PRELIMINARY TITLE

PERSONS
THE FAMILY CODE OF THE PHILIPPINES

Vda. De Consuegra v. GSIS Retirement Insurance Benefits

SOUTHERN LUZON EMPLOYEES ASSN. V. GOLPEO

Digested by Margaret Frances Aparte

Note:

A common law wife of the insured who has a legal wife is disqualified as beneficiary. It is not
required that there be a previous conviction for adultery or concubinage for the prohibition to
apply. However, in an earlier case (such as the present case), the common-law wife designated
prevailed over the legal wife because the case took place while the Old Civil Code was still
applicable, under which there was no provision similar to Art.2012.

FACTS:

Southern Luzon Employees' Association is composed of laborers and employees of Laguna tayabas
Bus Co., and Batangas Transportation Company, and one of its purposes is mutual aid of its
members and their defendants in case of death.

Roman A. Concepcion was a member until his death on December 13, 1950. In the form required
by the association to be accomplished by its members, with reference to the death benefit, Roman
A. Concepcion listed as his beneficiaries Aquilina Maloles, Roman M. Concepcion, Jr., Estela M.
Concepcion, Rolando M. Concepcion and Robin M. Concepcion.
Syt6
After the death of Roman A. Concepcion, the association was able to collect voluntary contributions
from its members amounting to P2,505. Three sets of claimants presented themselves, namely,
(1) Juanita Golpeo, legal wife of Roman A. Concepcion, and her children; (2) Aquilina Maloles,
common law wife of Roman A. Concepcion, and her children, named beneficiaries by the deceased;
and (3) Elsie Hicban, another common law wife of Roman A. Concepcion, and her child.

The court rendered a decision, declaring the defendants Aquiliana Malolos and her children the sole
beneficiaries of the sum of P2,505.00 and ordering the plaintiff to deliver said amount to them.

ISSUE:

WHETHER OR NOT THE COURT COMMITED ERROR IN DESIGNATING A COMMON LAW WIFE OF AN
INSURED AS THE BENEFICIARY INSTEAD OF THE LEGAL WIFE.

Remember: This case took place while the Old Civil Code was still applicable.

HELD: Judgment affirmed.

The decision is based mainly on the theory that the contract between the plaintiff and the
deceased Roman A. Concepcion partook of the nature of an insurance and that, therefore, the
amount in question belonged exclusively to the beneficiaries, invoking the following
pronouncements of this Court in the case of Del Val vs. Del Val, 29 Phil., 534:
With the finding of the trial court that the proceeds of the life-insurance policy belongs
exclusively to the defendant as his individual and separate property, we agree. That the
proceeds of an insurance policy belong exclusively to the beneficiary and not to the estate of
the person whose life was insured, and that such proceeds are the separate and individual
property of the beneficiary, and not of the heirs of the person whose life was insured, is the
doctrine in America. We believe that the same doctrine obtains in these Islands by virtue of
section 428 of the Code of Commerce, which reads:
"The amounts which the underwriter must deliver to the person insured, in fulfillment of the
contract, shall be the property creditors of any kind whatsoever of the person who effected the
insurance in favor of the formers."

AS TO THE CONTENTION OF THE COUNSELS PLAINTIFF THAT THE PROCEEDS OF THE INSURANCE
POLICY WERE DONATION OR GIFT MADE BY THE FATHER DURING HIS LIFETIME, SUCH THAT
UNDER THE CIVIL CODE ARE NOT BETTERMENTS AND SHALL BE CONSIDERED AS PART OF THE
LEGAL PORTION.
The court disagrees with this contention. The contract of life insurance is a special contract and the
destination of the proceeds thereof is determined by special laws which deal exclusively with that
subject. The Civil Code has no provisions which relate directly and specifically to life-insurance
contract or to the destination of life-insurance proceeds. That subject is regulate exclusively by the
Code of Commerce which provides for the terms of the contract, the relations of the parties and
the destination of the proceeds of the policy.