Kinds of Insurance

A. Life Insurance

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

G.R. No. 92383 July 17, 1992

SUN INSURANCE OFFICE, LTD., petitioner, vs.THE HON. COURT OF APPEALS and NERISSA LIM, respondents.

 

CRUZ, J.:

The petitioner issued Personal Accident Policy No. 05687 to Felix Lim, Jr. with a face value of P200,000.00. Two months later, he was dead with a bullet wound in his head. As beneficiary, his wife Nerissa Lim sought payment on the policy but her claim was rejected. The petitioner agreed that there was no suicide. It argued, however that there was no accident either.

Pilar Nalagon, Lim's secretary, was the only eyewitness to his death. It happened on October 6, 1982, at about 10 o'clock in the evening, after his mother's birthday party. According to Nalagon, Lim was in a happy mood (but not drunk) and was playing with his handgun, from which he had previously removed the magazine. As she watched television, he stood in front of her and pointed the gun at her. She pushed it aside and said it might he loaded. He assured her it was not and then pointed it to his temple. The next moment there was an explosion and Lim slumped to the floor. He was dead before he fell. 1

The widow sued the petitioner in the Regional Trial Court of Zamboanga City and was sustained. 2 The petitioner was sentenced to pay her P200,000.00, representing the face value of the policy, with interest at the legal rate; P10,000.00 as moral damages; P5,000.00 as exemplary damages; P5,000.00 as actual and compensatory damages; and P5,000.00 as attorney's fees, plus the costs of the suit. This decision was affirmed on appeal, and the motion for reconsideration was denied. 3 The petitioner then came to this Court to fault the Court of Appeals for approving the payment of the claim and the award of damages.

The term "accident" has been defined as follows:

The words "accident" and "accidental" have never acquired any technical signification in law, and when used in an insurance contract are to be construed and considered according to the ordinary understanding and common usage and speech of people generally. In-substance, the courts are practically agreed that the words "accident" and "accidental" mean that which happens by chance or fortuitously, without intention or design, and which is unexpected, unusual, and unforeseen. The definition that has usually been adopted by the courts is that an accident is an event that takes place without one's foresight or expectation — an event that proceeds from an unknown cause, or is an unusual effect of a known case, and therefore not expected. 4

An accident is an event which happens without any human agency or, if happening through human agency, an event which, under the circumstances, is unusual to and not expected by the person to whom it happens. It has also been defined as an injury which happens by reason of some violence or casualty to the injured without his design, consent, or voluntary co-operation. 5

In light of these definitions, the Court is convinced that the incident that resulted in Lim's death was indeed an accident. The petitioner, invoking the case of De la Cruz v. Capital Insurance, 6 says that "there is no accident when a deliberate act is performed unless some additional, unexpected, independent and unforeseen happening occurs which produces or brings about their injury or death." There was such a happening. This was the firing of the gun, which was the additional unexpected and independent and unforeseen occurrence that led to the insured person's death.

The petitioner also cites one of the four exceptions provided for in the insurance contract and contends that the private petitioner's claim is barred by such provision. It is there stated:

Exceptions —

The company shall not be liable in respect of

1. Bodily injury

xxx xxx xxx

b. consequent upon

i) The insured person attempting to commit suicide or willfully exposing himself to needless peril except in an attempt to save human life.

To repeat, the parties agree that Lim did not commit suicide. Nevertheless, the petitioner contends that the insured willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy.

It should be noted at the outset that suicide and willful exposure to needless peril are in pari materia because they both signify a disregard for one's life. The only difference is in degree, as suicide imports a positive act of ending such life whereas the second act indicates a reckless risking of it that is almost suicidal in intent. To illustrate, a person who walks a tightrope one thousand meters above the ground and without any safety device may not actually be intending to commit suicide, but his act is nonetheless suicidal. He would thus be considered as "willfully exposing himself to needless peril" within the meaning of the exception in question.

The petitioner maintains that by the mere act of pointing the gun to hip temple, Lim had willfully exposed himself to needless peril and so came under the exception. The theory is that a gun is per se dangerous and should therefore be handled cautiously in every case.

That posture is arguable. But what is not is that, as the secretary testified, Lim had removed the magazine from the gun and believed it was no longer dangerous. He expressly assured her that the gun was not loaded. It is submitted that Lim did not willfully expose himself to needless peril when he pointed the gun to his temple because the fact is that he thought it was not unsafe to do so. The act was precisely intended to assure Nalagon that the gun was indeed harmless.

The contrary view is expressed by the petitioner thus:

Accident insurance policies were never intended to reward the insured for his tendency to show off or for his miscalculations. They were intended to provide for contingencies. Hence, when I miscalculate and jump from the Quezon Bridge into the Pasig River in the belief that I can overcome the current, I have wilfully exposed myself to peril and must accept the consequences of my act. If I drown I cannot go to the insurance company to ask them to compensate me for my failure to swim as well as I thought I could. The insured in the case at bar deliberately put the gun to his head and pulled the trigger. He wilfully exposed himself to peril.

The Court certainly agrees that a drowned man cannot go to the insurance company to ask for compensation. That might frighten the insurance people to death. We also agree that under the circumstances narrated, his beneficiary would not be able to collect on the insurance policy for it is clear that when he braved the currents below, he deliberately exposed himself to a known peril.

The private respondent maintains that Lim did not. That is where she says the analogy fails. The petitioner's hypothetical swimmer knew when he dived off the Quezon Bridge that the currents below were dangerous. By contrast, Lim did not know that the gun he put to his head was loaded.

Lim was unquestionably negligent and that negligence cost him his own life. But it should not prevent his widow from recovering from the insurance policy he obtained precisely against accident. There is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident. Indeed, most accidents are caused by negligence. There are only four exceptions expressly made in the contract to relieve the insurer from liability, and none of these exceptions is applicable in the case at bar. **

It bears noting that insurance contracts are as a rule supposed to be interpreted liberally in favor of the assured. There is no reason to deviate from this rule, especially in view of the circumstances of this case as above analyzed.

On the second assigned error, however, the Court must rule in favor of the petitioner. The basic issue raised in this case is, as the petitioner correctly

observed, one of first impression. It is evident that the petitioner was acting in good faith then it resisted the private respondent's claim on the ground that the death of the insured was covered by the exception. The issue was indeed debatable and was clearly not raised only for the purpose of evading a legitimate obligation. We hold therefore that the award of moral and exemplary damages and of attorney's fees is unjust and so must be disapproved.

In order that a person may be made liable to the payment of moral damages, the law requires that his act be wrongful. The adverse result of an action does not per se make the act wrongful and subject the act or to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate; such right is so precious that moral damages may not be charged on those who may exercise it erroneously. For these the law taxes costs. 7

The fact that the results of the trial were adverse to Barreto did not alone make his act in bringing the action wrongful because in most cases one party will lose; we would be imposing an unjust condition or limitation on the right to litigate. We hold that the award of moral damages in the case at bar is not justified by the facts had circumstances as well as the law.

If a party wins, he cannot, as a rule, recover attorney's fees and litigation expenses, since it is not the fact of winning alone that entitles him to recover such damages of the exceptional circumstances enumerated in Art. 2208. Otherwise, every time a defendant wins, automatically the plaintiff must pay attorney's fees thereby putting a premium on the right to litigate which should not be so. For those expenses, the law deems the award of costs as sufficient. 8

WHEREFORE, the challenged decision of the Court of Appeals is AFFIRMED in so far as it holds the petitioner liable to the private respondent in the sum of P200,000.00 representing the face value of the insurance contract, with interest at the legal rate from the date of the filing of the complaint until the full amount is paid, but MODIFIED with the deletion of all awards for damages, including attorney's fees, except the costs of the suit.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-21574             June 30, 1966

SIMON DE LA CRUZ, plaintiff and appellee, vs.THE CAPITAL INSURANCE and SURETY CO., INC., defendant and appellant.

Achacoso, Nera and Ocampo for defendant and appellant.Agustin M. Gramata for plaintiff and appellee.

BARRERA, J.:

This is an appeal by the Capital Insurance & Surety Company, Inc., from the decision of the Court of First Instance of Pangasinan (in Civ Case No. U-265), ordering it to indemnify therein plaintiff Simon de la Cruz for the death of the latter's son, to pay the burial expenses, and attorney's fees.

Eduardo de la Cruz, employed as a mucker in the Itogon-Suyoc Mines, Inc. in Baguio, was the holder of an accident insurance policy (No. ITO-BFE-170) underwritten by the Capital Insurance & Surety Co., Inc., for the period beginning November 13, 1956 to November 12, 1957. On January 1, 1957, in connection with the celebration of the New Year, the Itogon-Suyoc Mines, Inc. sponsored a boxing contest for general entertainment wherein the insured Eduardo de la Cruz, a non-professional boxer participated. In the course of his bout with another person, likewise a non-professional, of the same height, weight, and size, Eduardo slipped and was hit by his opponent on the left part of the back of the head, causing Eduardo to fall, with his head hitting the rope of the ring. He was brought to the Baguio General Hospital the following day. The cause of death was reported as hemorrhage, intracranial, left.

Simon de la Cruz, the father of the insured and who was named beneficiary under the policy, thereupon filed a claim with the insurance company for payment of the indemnity under the insurance policy. As the claim was denied, De la Cruz instituted the action in the Court of First Instance of Pangasinan for specific performance. Defendant insurer set up the defense that the death of the insured, caused by his participation in a boxing contest, was not accidental and, therefore, not covered by insurance. After due hearing the court rendered the decision in favor of the plaintiff which is the subject of the present appeal.

It is not disputed that during the ring fight with another non-professional boxer, Eduardo slipped, which was unintentional. At this opportunity, his opponent landed on Eduardo's head a blow, which sent the latter to the ropes. That must have caused the cranial injury that led to his death. Eduardo was insured "against death or disability caused by accidental means". Appellant insurer now contends that while the death of the insured was due to head injury, said injury was sustained because of his voluntary participation in the contest. It is claimed that the participation in the boxing contest was the "means" that produced the injury which, in turn, caused the death of the insured. And, since his inclusion in the boxing card was voluntary on the part of the insured, he cannot be considered to have met his death by "accidental means".1äwphï1.ñët

The terms "accident" and "accidental", as used in insurance contracts, have not acquired any technical meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the terms have been taken to mean that which happen by chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. An accident is an event that takes place without one's foresight or expectation — an event that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not expected.1

Appellant however, would like to make a distinction between "accident or accidental" and "accidental means", which is the term used in the insurance policy involved here. It is argued that to be considered within the protection of the policy, what is required to be accidental is the means that caused or brought the death and not the death itself. It may be mentioned in this connection, that the tendency of court decisions in the United States in recent years is to eliminate the fine distinction between the terms "accidental" and "accidental means" and to consider them as legally synonymous.2 But, even if we take appellant's theory, the death of the insured in the case at bar would still be entitled to indemnification under the policy. The generally accepted rule is that, death or injury does not result from accident or accidental means within the terms of an accident-policy if it is the natural result of the insured's voluntary act, unaccompanied by anything unforeseen except the death or injury.3 There is no accident when a deliberate act is performed unless some additional, unexpected, independent, and unforeseen happening occurs which produces or brings about the result of injury or death.4 In other words, where the death or injury is not the natural or probable result of the insured's voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the protection of policies insuring against death or injury from accident.

In the present case, while the participation of the insured in the boxing contest is voluntary, the injury was sustained when he slid, giving occasion to the infliction by his opponent of the blow that threw him to the ropes of the ring. Without this unfortunate incident, that is, the unintentional slipping of the deceased, perhaps he could not have received that blow in the head and would not have died. The fact that boxing is attended with some risks of external injuries does not make any injuries received in the course of the game not accidental. In boxing as in other equally physically rigorous sports, such as basketball or baseball, death is not ordinarily anticipated to result. If, therefore, it ever does, the injury or death can only be accidental or produced by some unforeseen happening or event as what occurred in this case.

Furthermore, the policy involved herein specifically excluded from its coverage —

(e) Death or disablement consequent upon the Insured engaging in football, hunting, pigsticking, steeplechasing, polo-playing, racing of any kind, mountaineering, or motorcycling.

Death or disablement resulting from engagement in boxing contests was not declared outside of the protection of the insurance contract. Failure of the defendant insurance company to include death resulting from a boxing match or other sports among the prohibitive risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death.5

Wherefore, in view of the foregoing considerations, the decision appealed from is hereby affirmed, with costs against appellant. so ordered.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

 

G.R. No. 100970 September 2, 1992

FINMAN GENERAL ASSURANCE CORPORATION, petitioner, vs.THE HONORABLE COURT OF APPEALS and JULIA SURPOSA, respondents.

Aquino and Associates for petitioner.

Public Attorney's Office for private respondent.

 

NOCON, J.:

This is a petition for certiorari with a prayer for the issuance of a restraining order and preliminary mandatory injunction to annul and set aside the decision of the Court of Appeals dated July 11, 1991, 1 affirming the decision dated March 20, 1990 of the Insurance Commission 2 in ordering petitioner Finman General Assurance Corporation to pay private respondent Julia Surposa the proceeds of the personal accident Insurance policy with interest.

It appears on record that on October 22, 1986, deceased, Carlie Surposa was insured with petitioner Finman General Assurance Corporation under Finman General Teachers Protection Plan Master Policy No. 2005 and Individual Policy No. 08924 with his parents, spouses Julia and Carlos Surposa, and brothers Christopher, Charles, Chester and Clifton, all surnamed, Surposa, as beneficiaries. 3

While said insurance policy was in full force and effect, the insured, Carlie Surposa, died on October 18, 1988 as a result of a stab wound inflicted by one of the three (3) unidentified men without provocation and warning on the part of the former as he and his cousin, Winston Surposa, were waiting for a ride on their way home along Rizal-Locsin Streets, Bacolod City after attending the celebration of the "Maskarra Annual Festival."

Thereafter, private respondent and the other beneficiaries of said insurance policy filed a written notice of claim with the petitioner insurance company which denied said claim contending that murder and assault are not within the scope of the coverage of the insurance policy.

On February 24, 1989, private respondent filed a complaint with the Insurance Commission which subsequently rendered a decision, the pertinent portion of which reads:

In the light of the foregoing. we find respondent liable to pay complainant the sum of P15,000.00 representing the proceeds of the policy with interest. As no evidence was submitted to prove the claim for mortuary aid in the sum of P1,000.00, the same cannot be entertained.

WHEREFORE, judgment is hereby rendered ordering respondent to pay complainant the sum of P15,000.00 with legal interest from the date of the filing of the complaint until fully satisfied. With costs. 4

On July 11, 1991, the appellate court affirmed said decision.

Hence, petitioner filed this petition alleging grove abuse of discretion on the part of the appellate court in applying the principle of "expresso unius exclusio alterius" in a personal accident insurance policy since death resulting from murder and/or assault are impliedly excluded in said insurance policy considering that the cause of death of the insured was not accidental but rather a deliberate and intentional act of the assailant in killing the former as indicated by the location of the lone stab wound on the insured. Therefore, said death was committed with deliberate intent which, by the very nature of a personal accident insurance policy, cannot be indemnified.

We do not agree.

The terms "accident" and "accidental" as used in insurance contracts have not acquired any technical meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the terms have been taken to mean that which happen by chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. An accident is an event that takes place without one's foresight or expectation — an event that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not expected.

. . . The generally accepted rule is that, death or injury does not result from accident or accidental means within the terms of an accident-policy if it is the natural result of the insured's voluntary act, unaccompanied by anything unforeseen except the death or injury. There is no accident when a deliberate act is performed unless some additional, unexpected, independent, and unforeseen happening occurs which produces or brings about the result of injury or death. In other words, where the death or injury is not the natural or probable result of the insured's voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the protection of the policies insuring against death or injury from accident. 5

As correctly pointed out by the respondent appellate court in its decision:

In the case at bar, it cannot be pretended that Carlie Surposa died in the course of an assault or murder as a result of his voluntary act considering the very nature of these crimes. In the first place, the insured and his companion were on their way home from attending a festival. They were confronted by unidentified persons. The record is barren of any circumstance showing how the stab wound was inflicted. Nor can it be pretended that the malefactor aimed at the insured precisely because the killer wanted to take his life. In any event, while the act may not exempt the unknown perpetrator from criminal liability, the fact remains that the happening was a pure accident on the part of the victim. The insured died from an event that took place without his foresight or expectation, an event that proceeded from an unusual effect of a known cause and, therefore, not expected. Neither can it be said that where was a capricious desire on the part of the accused to expose his life to danger considering that he was just going home after attending a festival. 6

Furthermore, the personal accident insurance policy involved herein specifically enumerated only ten (10) circumstances wherein no liability attaches to petitioner insurance company for any injury, disability or loss suffered by the insured as a result of any of the stimulated causes. The principle of " expresso unius exclusio alterius" — the mention of one thing implies the exclusion of another thing — is therefore applicable in the instant case since murder and assault, not having been expressly included in the enumeration of the circumstances that would negate liability in said insurance policy cannot be considered by implication to discharge the petitioner insurance company from liability for, any injury, disability or loss suffered by the insured. Thus, the failure of the petitioner insurance company to include death resulting from murder or assault among the prohibited risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death.

Article 1377 of the Civil Code of the Philippines provides that:

The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.

Moreover,

it is well settled that contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer. Thus ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary. 7

WHEREFORE, finding no irreversible error in the decision of the respondent Court of Appeals, the petition forcertiorari with restraining order and preliminary injunction is hereby DENIED for lack of merit.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-12189             April 29, 1960

FRANCISCA GALLARDO, plaintiff-appellee, vs.HERMENEGILDA S. MORALES, defendant-appellant.

Cajulis and Dolorfino for appellee.Filemon Cajator for appellant.

CONCEPCION, J.:

The issue before us is whether a personal accident insurance which "insures for injuries and/or death as a result of murder or assault or attempt thereat" is a life insurance, within the purview of Rule 39, section 12, subdivision (k) of the Rules of Court, exempting from execution.

All moneys, benefits, privileges, or annuities accruing or in any manner growing out of any life insurance, if the annual premiums paid do not exceed five hundred pesos, and if they exceed that sum a like exemption shall exist which shall bear the same proportion to the moneys, benefits, privileges, and annuities so accruing or growing out of such insurance that said five hundred pesos bears to the whole annual premiums paid.

In accordance with a compromise agreement between the parties in the above-entitled case, a decision was rendered therein by the Court of First Instance of Manila, on February 3, 1956, sentencing defendant Hermenegilda S. Morales to pay to plaintiff Francisca Gallardo the sum of Seven Thousand Pesos (P7,000.00). In due course, the corresponding writ of execution was issued and delivered to the Sheriff of Manila, who, on August 8, 1956, garnished and levied execution on the sum of P7,000.00, out of the P30,000.00 a due from the Capital Insurance & Surety Co., Inc., to said defendant, as beneficiary under a personal accident policy issued by said company to defendant's husband, Luis Morales, who died, on August 26, 1950, by assassination. Invoking the above-quoted provision of the Rules of Court, defendant asked the sheriff to quash and lift said garnishment or levy on execution. Upon denial of this request by the sheriff, defendant filed a motion praying that the aforementioned sum of P7,000.00 be declared exempt from execution under said provision of the Rules of Court, and that the Sheriff of Manila be ordered to quash or lift said garnishment or levy on execution. This motion was denied by an order dated October 18, 1956. Hence, the present appeal by the defendant, who maintains that the policy in question is a life insurance policy, within the purview of the aforementioned exemption, for it insured her husband ". . . for injuries and/or death as a result of murder or assault or attempt thereat."

In its order denying the claim for exemption set up by the defendant, the lower court expressed itself as follows:

Upon a perusal of the authorities cited by the parties, this Court is fully convinced that there is a fundamental distinction between life insurance, and accident insurance, and the insurance policy issued to Luis G. Morales, husband of herein defendant, was undoubtedly an accident insurance, as distinguished from a life insurance. As conceded by the facts appearing in the pleadings, the personal accident policy, part of the proceeds of which is under garnishment, was for P50,000.00 and yet the annual premium was for P15.00. If it were an ordinary life insurance policy, taking into account that the insured, Luis G. Morales, was 38 years of age and the amount of the policy was for P50,000.00 the annual premium would have been around P1,206.00. Besides, the period for the policy was stipulated for one year, and considerations as to age, health, occupation and other personal circumstances were not taken into account in an accident insurance policy. Even the certification issued by the insurance commissioner on August 23, 1956, marked as Annex "1" of the opposition, shows that the Capital Insurance and Surety Company Inc. is a non-life insurance company and that the only authority granted to it to transact business covers fire, marine, surety, fidelity, accident, motor car, and miscellaneous insurance, except life insurance. From this circumstance alone, not to mention many others, there are abundant indications that there exists a fundamental distinction between life insurance and accident insurance. As counsel for oppositor has clearly pointed out, an accident policy merely insures the person from injury and or death resulting from murder, assault, or an attempt thereat, while in life insurance policy, what is insured is the life of the subject for a definite number of years. From the authorities quoted by the oppositor, this Court is fully convinced that an accident policy is fundamentally different from a life insurance policy, especially if this Court takes into account that accident insurance is an indemnity or casualty contract, while life insurance is an investment contract.

It is not disputed that a life insurance is, generally speaking, distinct and different from an accident insurance. However, when one of the risks insured

in the latter is the death of the insured by accident, then there are authorities to the effect that such accident insurance may, also, be regarded as a life insurance.

"Life insurance" is a contract whereby one party insures a person against loss by the death of another. Petition of Robbins, 140 A. 366, 367, 126 Me. 555.

An insurance on life is a contract by which the insurer, for a stipulated sum, engages to pay a certain amount of money if another dies within the time limited by the policy. Cason vs. Owens, 26 S. E. 75, 76, 100 Ga. 142.

Life insurance includes in which the payment of the insurance money is contingent upon the loss of life. Bowless vs. Mutual Ben. Health & Accident Ass'n, C.C.A. Va. 99F. 2d 44. 48, 49.

A contract for life insurance is really a contract for insurance for one year in consideration of an advanced premium, with the right of assured to continue it from year to year upon payment of a premium as stipulated. Mutual Life Ins. Co. 100 Pa 172, 180.

In its broader sense, "life insurance" includes accident insurance, since life is insured under either contract. American Trust & Banking Co. vs. Lessly, 106 S.W. 2d. 551, 552, 171 Tenn. 561, 111 A.L.R. 59.

Under statute providing that 'any life insurance' on life of husband shall insure to benefit of widow and children exempt from husband's debt, proceeds of policy insuring against death by accident insured to widow's benefit free from husband's debts. Code 1932, B 8456. American Trust & Banking Co. vs. Lessly, 106 S.W. 2d 551, 171 Tenn. 511 III A.L.R. 59.

Insurance policy, providing for payment in case of accidental death, is "life insurance policy" to such extent within state statue prescribing in-contestable period for policies. Code S.C. 1932 ss 7986, 7987. Pacific Mut. Life Ins. Co. of California vs. Parker, C.C.A.S.C., 71 F. 2d 872, 875.

"Life insurance" includes all policies of insurance in which payment of insurance money is contingent upon loss of life. . . . Smith vs. Equitable Life Assur. Soc. of U.S., 89 S.W. 2d 165, 167, 169 Tenn. 477.

Insurance policy including a death benefit and a health or accident disability benefit constituted a "life insurance policy" within meaning of laws 1926, c. 118, S. 134, imposing privilege tax on insurance companies with different rates as between life insurance companies and other companies, in view of provisions of Code 1906, ss 2576, 2598 (Hemingway's Code 1927, ss 5830, 5856), and Law 1924, c. 191, s I (Hemingway's Code 1927, s 5995); it being immaterial that in some policy forms the health and disability feature was more valuable asent a showing that death provision was inserted to avoid the higher tax. Universal Life Ins. Co. vs. State, 121 So. 849, 850, 155 Miss. 358." (25 Words & Phrases 260, 261, 262.)

When the application was made, Harris W. Rimmer carried life insurance with the Equitable Life Assurance Society, for $10,000, payable upon proof of death, with a provision that upon death by accident the amount of insurance payable would be increased to $20,000. The plaintiff insisted that this was life insurance, a disclosure of which was not called for in question 10, while the defendant insisted it was accident insurance that should have been disclosed and further insisted that, it being a fact material to the risk the failure to disclose the policy in the Equitable Life Assurance Society rendered the policy issued to the applicant void. . . .

The court might have gone further and held that the failure of the applicant to characterize the insurance in the Equitable Life Assurance Society as accident insurance did not constitute a false answer to the inquiry of what accident or health insurance he was carrying. The policy in the Equitable Life Assurance Society covered loss of life from natural as well as external and accidental causes, and was life insurance. The mere addition of the double indemnity clause providing for increased insurance upon proof of death by accident did not divest the policy of its character of insurance on life, or make the contract other than life insurance,  for insurance on life includes all policies of insurance in which the payment of the insurance money is contingent upon the loss of life. Logan vs. Fidelity & Casualty Co., 146 Mo. 114, 47 S.W. 948. See also Johnson vs. Fidelity & Guaranty Co., 148 Mich. 406, 151 N.W. 593, L.R.A. 1916A, 475; Zimmer vs.Central

Accidental Co., 207 Pa. 472, 56 A. 1003; Wright vs. Fraternities Health & Accident Ass'n. 107 Me. 418, 78A. 475, 32 L.R.A. (N.S.)461; Metropolitan Life Ins. Co. vs. Ins. Com'r 208 Mass. 386, 94 N.E. 477; Standard Life & Accident Ins. Co. vs. Caroll, 86 F. 567, 41 L.R.A. 194; Wahl vs. Interstate Business Men's Accident Ass'n 201 Iowa; 1355, 207 N.W. 395, 50 A.L.R. 1377." (Provident Life & Accident Ins. Co. vs.Rimmer, 12 S. W. 2d Series, 365, 367.)

For this reason, and because the above-quoted provision of the Rules of Court makes reference to "any life insurance," we are inclined to believe that the exemption there established applies to ordinary life insurance contracts, as well as to those which, although intended primarily to indemnify for risks arising from accident, likewise, insure against loss of life due, either to accidental causes, or to the willful and criminal act of another, which, as such, is not strictly accidental in nature. Indeed, it has been held that statutes of this nature seek to enable the head of the family to secure his widow and children from becoming a burden upon the community and, accordingly, should merit a liberal interpretation.

The object of this statue was to enable a husband, when death deprived wife and children of his support, to secure them from want and to prevent them from becoming a charge upon the public. Necessities of the wife and children and the public interest are none the less if the death of the husband be brought about by accident rather than by disease. The intent of the legislature in the enactment of this statute would not be advanced by the construction of the law upon which the petitioners insist. (American Trust & Banking Co.vs. Lessly et al., Supreme Court of Tenn., 106 S.W. 2d, 551, 552.)

Under statutes providing to that effect, the proceeds of life insurance are exempt from the claims of creditors, a limitation being sometimes imposed as to amount, see infra Sec. 40, or as to the beneficiaries entitled to the exemption, see infra subdivision of this section. Statutes exempting life insurance are regarded as exemption laws, and not as part of the insurance from law of the state, nor as designed simply to protect insurer from harassing litigation. Such statutes should be construed liberally and in the light of, and to give effect to, their purpose of enabling an individual to provide a fund after his death for his family which will be free from the claims of creditors. The exemption privilege is created not by contract but by legislative grant, and grounds for the exemption of the proceeds of insurance policies must be found in the statutes. (35 C.J.S. pp. 53-54.)

By weight of authority, exemption statutes or rules should be liberally construed with a view to giving effect to their beneficent and humane purpose. To this end, every reasonable doubt as to whether a given property is or is not exempt should be resolved in favor of exemption. (Comments on the Rules of Court by Moran [1957 ed.] Vol. 1, p. 564.)

Wherefore, the order appealed from is reversed, and the garnishment in dispute hereby set aside and quashed, with the costs of this instance against plaintiff Francisca Gallardo. It is so ordered.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

G.R. No. 105562 September 27, 1993

LUZ PINEDA, MARILOU MONTENEGRO, VIRGINIA ALARCON, DINA LORENA AYO, CELIA CALUMBAG and LUCIA LONTOK, petitioners, vs.HON. COURT OF APPEALS and THE INSULAR LIFE ASSURANCE COMPANY, LIMITED, respondents.

Mariano V. Ampil, Jr. for petitioners.

Ramon S. Caguiao for private respondent.

 

DAVIDE, JR., J.:

This is an appeal by certiorari to review and set aside the Decision of the public respondent Court of Appeals in CA-G.R. SP No. 22950 1 and its Resolution denying the petitioners' motion for reconsideration. 2 The challenged decision modified the decision of the Insurance Commission in IC Case No. RD-058. 3

The petitioners were the complainants in IC Case No. RD-058, an administrative complaint against private respondent Insular Life Assurance Company, Ltd. (hereinafter Insular Life), which was filed with the Insurance Commission on 20 September 1989. 4 They prayed therein that after due proceedings, Insular Life "be ordered to pay the claimants their insurance claims" and that "proper sanctions/penalties be imposed on" it "for its deliberate, feckless violation of its contractual obligations to the complainants, and of the Insurance Code." 5 Insular Life's motion to dismiss the complaint on the ground that "the claims of complainants are all respectively beyond the jurisdiction of the Insurance Commission as provided in Section 416 of the Insurance Code,"  6 having been denied in the Order of 14 November 1989, 7it filed its answer on 5 December 1989. 8 Thereafter, hearings were conducted on various dates.

On 20 June 1990, the Commission rendered its decision  9 in favor of the complainants, the dispositive portion of which reads as follows:

WHEREFORE, this Commission merely orders the respondent company to:

a) Pay a fine of FIVE HUNDRED PESOS (P500.00) a day from the receipt of a copy of this Decision until actual payment thereof;

b) Pay and settle the claims of DINA AYO and LUCIA LONTOK, for P50,000.00 and P40,000.00, respectively;

c) Notify henceforth it should notify individual beneficiaries designated under any Group Policy, in the event of the death of insured(s), where the corresponding claims are filed by the Policyholder;

d) Show cause within ten days why its other responsible officers who have handled this case should not be subjected to disciplinary and other administrative sanctions for deliberately releasing to Capt. Nuval the check intended for spouses ALARCON, in the absence of any Special Power of Attorney for that matter, and for negligence with respect to the release of the other five checks.

SO ORDERED. 10

In holding for the petitioners, the Insurance Commission made the following findings and conclusions:

After taking into consideration the evidences [sic], testimonial and documentary for the complainants and the respondent, the Commission finds that; First: The respondent erred in appreciating that the powers of attorney executed by five (5) of the several beneficiaries convey absolute authority to Capt. Nuval, to demand, receive, receipt and take delivery of insurance proceeds from respondent Insular Life. A cursory reading of the questioned powers of authority would disclosed [sic] that they 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. On the contrary, the said powers of attorney are couched in terms which could easily arouse suspicion of an ordinary man. . . .

Second: The testimony of the complainants' rebuttal witness, Mrs. Trinidad Alarcon, who declared in no uncertain terms that neither she nor her husband, executed a special power of attorney in favor of Captain Rosendo Nuval, authorizing him to claim, receive, receipt and take delivery of any insurance proceeds from Insular Life arising out of the death of their insured/seaman son, is not convincingly refuted.

Third: Respondent Insular Life did not observe Section 180 of the Insurance Code, when it issued or released two checks in the amount of P150,000.00 for the three minor children (P50,000.00 each) of complainant, Dina Ayo and another check of P40,000.00 for minor beneficiary Marissa Lontok, daughter of another complainant Lucia Lontok, there being no showing of any court authorization presented or the requisite bond posted.

Section 180 is quotes [sic] partly as follows:

. . . In the absence of a judicial guardian, the father, or in the latter's absence or incapacity, the mother of any minor, who is an insured or a beneficiary under a contract of life, health or accident insurance, may exercise, in behalf of said minor, any right, under the policy, without necessity of court authority or the giving of a bond where the interest of the minor in the particular act involved does not exceed twenty thousand pesos . . . . 11

Insular Life appealed the decision to the public respondent which docketed the case as CA-G.R. SP No. 22950. The appeal urged the appellate court to reverse the decision because the Insurance Commission (a) had no jurisdiction over the case considering that the claims exceeded P100,000.00, (b) erred in holding that the powers of attorney relied upon by Insular Life were insufficient to convey absolute authority to Capt. Nuval to demand, receive and take delivery of the insurance proceeds pertaining to the petitioners, (c) erred in not giving credit to the version of Insular Life that the power of attorney supposed to have been executed in favor of the Alarcons was missing, and (d) erred in holding that Insular Life was liable for violating Section 180 of the Insurance Code for having released to the surviving mothers the insurance proceeds pertaining to the beneficiaries who were still minors despite the failure of the former to obtain a court authorization or to post a bond.

On 10 October 1991, the public respondent rendered a decision, 12 the decretal portion of which reads:

WHEREFORE, the decision appealed from is modified by eliminating therefrom the award to Dina Ayo and Lucia Lontok in the amounts of P50,000.00 and P40,000.00, respectively. 13

It found the following facts to have been duly established:

It appears that on 23 September 1983, Prime Marine Services, Inc. (PMSI, for brevity), a crewing/manning outfit, procured Group PoIicy No. G-004694 from respondent-appellant Insular Life Assurance Co., Ltd. to provide life insurance coverage to its sea-based employees enrolled under the plan. On 17 February 1986, during the effectivity of the policy, six covered employees of the PMSI perished at sea when their vessel, M/V Nemos, a Greek cargo vessel, sunk somewhere in El Jadida, Morocco. They were survived by complainants-appellees, the beneficiaries under the policy.

Following the tragic demise of their loved ones, complainants-appellees sought to claim death benefits due them and, for this purpose, they approached the President and General Manager of PMSI, Capt. Roberto Nuval. The latter evinced willingness to assist complainants-appellees to recover Overseas Workers Welfare Administration (OWWA) benefits from the POEA and to work for the increase of their PANDIMAN and other benefits arising from the deaths of their husbands/sons. They were thus made to execute, with the exception of the spouses Alarcon, special powers of attorney authorizing Capt. Nuval to, among others, "follow up, ask, demand, collect and receive" for their benefit indemnities of sums of money due them relative to the sinking of M/V Nemos. By virtue of these written powers of attorney, complainants-appellees were able to receive their respective death benefits. Unknown to them, however, the PMSI, in its capacity as employer and policyholder of the life insurance of its deceased workers, filed with respondent-appellant formal claims for and in behalf of the beneficiaries, through its President, Capt. Nuval. Among the documents submitted by the latter for the processing of the claims were five special powers of attorney executed by complainants-appellees. On the basis of these and other documents duly submitted, respondent-appellant drew against its account with the Bank of the Philippine Islands on 27 May 1986 six (6) checks, four for P200,00.00 each, one for P50,000.00 and another for P40,00.00, payable to the order of complainants-appellees. These checks were released to the treasurer of PMSI upon instructions of Capt. Nuval over the phone to Mr. Mariano Urbano, Assistant Department Manager for Group Administration Department of respondent-appellant. Capt. Nuval, upon receipt of these checks from the treasurer, who happened to be his son-in-law, endorsed and deposited them in his account with the Commercial Bank of Manila, now Boston Bank.

On 3 July 1989, after complainants-appellees learned that they were entitled, as beneficiaries, to life insurance benefits under a group policy with respondent-appellant, they sought to recover these benefits from Insular Life but the latter denied their claim on the ground that the liability to complainants-appellees was already extinguished upon delivery to and receipt by PMSI of the six (6) checks issued in their names. 14

On the basis thereof, the public respondent held that the Insurance Commission had jurisdiction over the case on the ground that although some

of the claims exceed P100,000.00, the petitioners had asked for administrative sanctions against Insular Life which are within the Commission's jurisdiction to grant; hence, "there was merely a misjoinder of causes of action . . . and, like misjoinder of parties, it is not a ground for the dismissal of the action as it does not affect the other reliefs prayed for." 15 It also rejected Insular Life's claim that the Alarcons had submitted a special power of attorney which they (Insular Life) later misplaced.

On the other hand, the public respondent ruled that the powers of attorney, Exhibits "1" to "5," relied upon by Insular Life were sufficient to authorize Capt. Nuval to receive the proceeds of the insurance pertaining to the beneficiaries. It stated:

When the officers of respondent-appellant read these written powers, they must have assumed Capt. Nuval indeed had authority to collect the insurance proceeds in behalf of the beneficiaries who duly affixed their signatures therein. The written power is specific enough to define the authority of the agent to collect any sum of money pertaining to the sinking of the fatal vessel. Respondent-appellant interpreted this power to include the collection of insurance proceeds in behalf of the beneficiaries concerned. We believe this is a reasonable interpretation even by an officer of respondent-appellant unschooled in the law. Had respondent appellant, consulted its legal department it would not have received a contrary view. There is nothing in the law which mandates a specific or special power of attorney to be executed to collect insurance proceeds. Such authority is not included in the enumeration of Art. 1878 of the New Civil Code. Neither do we perceive collection of insurance claims as an act of strict dominion as to require a special power of attorney. Moreover, respondent-appellant had no reason to doubt Capt. Nuval. Not only was he armed with a seemingly genuine authorization, he also appeared to be the proper person to deal with respondent-appellant being the President and General Manager of the PMSI, the policyholder with whom respondent-appellant always dealt. The fact that there was a verbal agreement between complainants-appellees and Capt. Nuval limiting the authority of the latter to claiming specified death benefits cannot prejudice the insurance company which relied on the terms of the powers of attorney which on their face do not disclose such limitation. Under the circumstances, it appearing that complainants-appellees have failed to point to a positive provision of law or stipulation in the policy requiring a specific power of attorney to be presented, respondents-appellant's reliance on the written powers was in order and it cannot be penalized for such an act. 16

Insofar as the minor children of Dina Ayo and Lucia Lontok were concerned, it ruled that the requirement in Section 180 of the Insurance Code which provides in part that:

In the absence of a judicial guardian, the father, or in the latter's absence or incapacity, the mother, of any minor, who is an insured or a beneficiary under a contract of life, health or accident insurance, may exercise, in behalf of said minor, any right under the policy, without necessity of court authority or the giving of a bond, where the interest of the minor in the particular act involved does not exceed twenty thousand pesos. Such a right, may include, but shall not be limited to, obtaining a policy loan, surrendering the policy, receiving the proceeds of the policy, and giving the minor's consent to any transaction on the policy.

has been amended by the Family Code 17 which grants the father and mother joint legal guardianship over the property of their unemancipated common child without the necessity of a court appointment; however, when the market value of the property or the annual income of the child exceeds P50,000.00, the parent concerned shall be required to put up a bond in such amount as the court may determine.

Hence, this petition for review on certiorari which we gave due course after the private respondent had filed the required comment thereon and the petitioners their reply to the comment.

We rule for the petitioners.

We have carefully examined the specific powers of attorney, Exhibits "1" to "5," which were executed by petitioners Luz Pineda, Lucia B. Lontok, Dina Ayo, Celia Calumag, and Marilyn Montenegro, respectively, on 14 May 1986 18 and uniformly granted to Capt. Rosendo Nuval the following powers:

To follow-up, ask, demand, collect and receipt for my benefit indemnities or sum of money due me relative to the sinking of M.V. NEMOS in the vicinity of El Jadida, Casablanca, Morocco on the evening of February 17, 1986; and

To sign receipts, documents, pertinent waivers of indemnities or other writings of whatsoever nature with any and all third persons, concerns and entities, upon terms and conditions acceptable to my said attorney.

We agree with the Insurance Commission that 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. On the contrary, the said powers of attorney are couched in terms which could easily arouse suspicion of an ordinary man." 19 The holding of the public respondent to the contrary is principally premised on its opinion that:

[t]here is nothing in the law which mandates a specific or special power of attorney to be executed to collect insurance proceeds. Such authority is not included in the enumeration of art. 1878 of the New Civil Code. Neither do we perceive collection of insurance claims as an act of strict dominion as to require a special power of attorney.

If this be so, then they could not have been meant to be a general power of attorney since Exhibits "1" to "5" are special powers of attorney. The execution by the principals of special powers of attorney, which clearly appeared to be in prepared forms and only had to be filled up with their names, residences, dates of execution, dates of acknowledgment and others, excludes any intent to grant a general power of attorney or to constitute a universal agency. Being special powers of attorney, they must be strictly construed.

Certainly, it would be highly imprudent to read into the special powers of attorney in question the power to collect and receive the insurance proceeds due the petitioners from Group Policy No. G-004694. 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. Such practice was testified to by Mr. Marciano Urbano, Insular Life's Assistant Manager of the Group Administrative Department, thus:

ATTY. CAGUIOA:

Can you explain to us why in this case, the claim was filed by a certain Capt. Noval [sic]?

WITNESS:

a The practice of our company in claim pertaining to group insurance, the policyholder is the one who files the claim for the beneficiaries of the deceased. At that time, Capt. Noval [sic] is the President and General Manager of Prime Marine.

q What is the reason why policyholders are the ones who file the claim and not the designated beneficiaries of the employees of the policyholders?

a Yes because group insurance is normally taken by the employer as an employee-benefit program and as such, the benefit should be awarded by the policyholder to make it appear that the benefit really is given by the employer. 20

On cross-examination, Urbano further elaborated that even payments, among other things, are coursed through the policyholder:

q What is the corporate concept of group insurance insofar as Insular Life is concerned?

WITNESS:

a Group insurance is a contract where a group of individuals are covered under one master contract. The individual underwriting characteristics of each individual is not considered in the determination of whether the individual is insurable or not. The contract is between the policyholder and the insurance company. In our case, it is Prime Marine and Insular Life. We do not have contractual obligations with the individual employees; it is between Prime Marine and Insular Life.

q And so it is part of that concept that all inquiries, follow-up, payment of claims, premium billings, etc. should always be coursed thru the policyholder?

a Yes that is our practice.

q And when you say claim payments should always be coursed thru the policyholder, do you require a power of attorney to be presented by the policyholder or not?

a Not necessarily.

q In other words, under a group insurance policy like the one in this case, Insular Life could pay the claims to the policyholder himself even without the presentation of any power of attorney from the designated beneficiaries?

xxx xxx xxx

WITNESS:

a No. Sir.

ATTY. AMPIL:

q Why? Is this case, the present case different from the cases which you answered that no power of attorney is necessary in claims payments?

WITNESS:

a We did not pay Prime Marine; we paid the beneficiaries.

q Will you now tell the Honorable Commission why you did not pay Prime Marine and instead paid the beneficiaries, the designated beneficiaries?

xxx xxx xxx

ATTY. AMPIL:

I will rephrase the question.

q Will you tell the Commission what circumstances led you to pay the designated beneficiaries, the complainants in this case, instead of the policyholder when as you answered a while ago, it is your practice in group insurance that claims payments, etc., are coursed thru the policyholder?

WITNESS:

a It is coursed but, it is not paid to the policyholder.

q And so in this case, you gave the checks to the policyholder only coursing them thru said policyholder?

a That is right, Sir.

q Not directly to the designated beneficiaries?

a Yes, Sir. 21

This practice is usual in the group insurance business and is consistent with the jurisprudence thereon in the State of California — from whose laws our Insurance Code has been mainly patterned — which holds that the employer-policyholder is the agent of the insurer.

Group insurance is a comparatively new form of insurance. In the United States, the first modern group insurance policies appear to have been issued in 1911 by the Equitable Life Assurance Society. 22 Group insurance is essentially a single insurance contract that provides coverage for many individuals. In its original and most common form, group insurance provides life or health insurance coverage for the employees of one employer.

The coverage terms for group insurance are usually stated in a master agreement or policy that is issued by the insurer to a representative of the group or to an administrator of the insurance program, such as an employer. 23The employer acts as a functionary in the collection and payment of premiums and in performing related duties. Likewise falling within the ambit of administration of a group policy is the disbursement of insurance payments by the employer to the employees. 24 Most policies, such as the one in this case, 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 titular or named insured, the insurance is actually related to the life and health of the employee. Indeed, the employee is in the position of a real party to the master policy, and even 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. 25 Put differently, the labor of the employees is the true source of the benefits, which are a form of additional compensation to them.

It has been stated that every problem concerning group insurance presented to a court should be approached with the purpose of giving to it every legitimate opportunity of becoming a social agency of real consequence considering that the primary aim is to provide the employer with a means of procuring insurance protection for his employees and their families at the lowest possible cost, and in so doing, the employer creates goodwill with his employees, enables the employees to carry a larger amount of insurance than they could otherwise, and helps to attract and hold a permanent class of employees. 26

In Elfstrom vs. New York Life Insurance Company, 27 the California Supreme Court explicitly ruled that in group insurance policies, the employer is the agent of the insurer. Thus:

We are convinced that the employer is the agent of the insurer in performing the duties of administering group insurance policies. It cannot be said that the employer acts entirely for its own benefit or for the benefit of its employees in undertaking administrative functions. While a reduced premium may result if the employer relieves the insurer of these tasks, and this, of course, is advantageous to both the employer and the employees, the insurer also enjoys significant advantages from the arrangement. The reduction in the premium which results from employer-administration permits the insurer to realize a larger volume of sales, and at the same time the insurer's own administrative costs are markedly reduced.

xxx xxx xxx

The most persuasive rationale for adopting the view that the employer acts as the agent of the insurer, however, is that the employee has no knowledge of or control over the employer's actions in handling the policy or its administration. An agency relationship is based upon consent by one person that another shall act in his behalf and be subject to his control. It is clear from the evidence regarding procedural techniques here that the insurer-employer relationship meets this agency test with regard to the administration of the policy, whereas that between the employer and its employees fails to reflect true agency. The insurer directs the performance of the employer's administrative acts, and if these duties are not undertaken properly the insurer is in a position to exercise more constricted control over the employer's conduct.

In Neider vs. Continental Assurance Company, 28 which was cited in Elfstrom, it was held that:

[t]he employer owes to the employee the duty of good faith and due care  in attending to the policy, and that the employer should make clear to the employee anything required of him to keep the policy in effect, and the time that the obligations are due. In its position as administrator of the policy, we feel also that the employer should be considered as the agent of the insurer, and any omission of duty  to the employee in its administration should be attributable to the insurer.

The ruling in Elfstrom was subsequently reiterated in the cases of Bass vs. John Hancock Mutual Life Insurance Co. 29 and Metropolitan Life Insurance Co. vs. State Board of Equalization. 30

In the light of the above disquisitions and after an examination of the facts of this case, we hold that PMSI, through its President and General Manager, Capt. Nuval, acted as the agent of Insular Life. The latter is thus bound by the misconduct of its agent.

Insular Life, however, likewise recognized Capt. Nuval as the attorney-in-fact of the petitioners. Unfortunately, through its official, Mr. Urbano, it acted imprudently and negligently in the premises by relying without question on the special power of attorney. In Strong vs. Repide, 31 this Court ruled that it is among the established principles in the civil law of Europe as well as the common law of American that 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. And in Harry E. Keller Electric Co. vs. Rodriguez,32 this Court, quoting Mechem on Agency, 33 stated that:

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. So if the suggestions of probable limitations be of such a clear and reasonable quality, or if the character assumed by the agent is of such a suspicious or unreasonable nature, or if the authority which he seeks to exercise is of such an unusual or improbable character, as would suffice to put an ordinarily prudent man upon his guard, 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. (emphasis supplied)

Even granting for the sake of argument that the special powers of attorney were in due form, Insular Life was grossly negligent in delivering the checks, drawn in favor of the petitioners, to a party who is not the agent mentioned in the special power of attorney.

Nor can we agree with the opinion of the public respondent that since the shares of the minors in the insurance proceeds are less than P50,000.00, then under Article 225 of the Family Code their mothers could receive such shares without need of either court appointments as guardian or the posting of a bond. It is of the view that said Article had repealed the third paragraph of Section 180 of the Insurance Code. 34 The pertinent portion of Article 225 of the Family Code reads as follows:

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.

It is clear from the said Article that regardless of the value of the unemancipated common child's property, the father and mother ipso jure become the legal guardian of the child's property. However, 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.

It must, however, be noted that the second paragraph of Article 225 of the Family Code speaks of the "market value of the property or the annual income of the child," which means, therefore, the aggregate of the child's property or annual income; if this exceeds P50,000.00, a bond is required. There is no evidence that the share of each of the minors in the proceeds of the group policy in question is the minor's only property. Without such evidence, it would not be safe to conclude that, indeed, that is his only property.

WHEREFORE, the instant petition is GRANTED. The Decision of 10 October 1991 and the Resolution of 19 May 1992 of the public respondent in CA-G.R. SP No. 22950 are SET ASIDE and the Decision of the Insurance Commission in IC Case No. RD-058 is REINSTATED.

Costs against the private respondent.

SO ORDERED.