Fe de Joya Landicho et al. v. Government Service Insurance System, 150 Phil. 793 (1972)
**Facts:**
On June 1, 1964, the Government Service Insurance System (GSIS) issued an optional additional life insurance policy (No. OG-136107) to Flaviano Landicho, a civil engineer in the Bureau of Public Works. Per policy conditions, the premiums were due monthly and would be deducted from Landicho’s salary by the Bureau’s collecting officer.
– The policy became effective upon the first premium payment and contained the provision that non-deduction of premiums would constitute a debt by Landicho.
– On June 29, 1966, Landicho died in a plane crash.
– His spouse, Fe de Joya Landicho, filed a claim with the GSIS for the insured sum of ₱15,800 under the double indemnity clause.
– The GSIS denied the claim because no premium payments had been recorded.
– Fe de Joya Landicho filed a lawsuit, resulting in the Court of First Instance of Manila ruling in her favor, awarding ₱15,800 plus interest, attorney’s fees, and costs. The GSIS appealed to the Supreme Court.
**Issues:**
1. Whether the insurance policy was in force given that no premiums were paid.
2. Interpretation of conflicting provisions within the insurance application and policy.
**Court’s Decision:**
1. **Policy Validity Despite Non-Payment:**
– The Supreme Court reasoned that the clauses related to premium deductions and their effect should be interpreted in favor of the insured. The language implied that the non-deduction of premiums was not intended to void the policy but to create an indebtedness to the GSIS, payable later.
– The Court held that the failure of GSIS to inform the Bureau of Public Works to deduct premium payments should not penalize the insured.
2. **Ambiguities in the Contract:**
– The Court underscored the doctrine that ambiguities in insurance policies must be construed against the insurer, given that these contracts are typically drafted by them without input from the insured.
**Doctrine:**
– Ambiguities in insurance contracts are construed strictly against the insurer and liberally in favor of the insured, according to Article 1377 of the Civil Code.
– Clauses that create indebtedness due to non-deduction of premiums imply the policy remains in force, with the premiums counted as debt.
**Class Notes:**
– **Insurance Policy Clauses:** Premium payment procedure impact on policy validity.
– **Contract Interpretation:** Ambiguities favor the insured (‘contra proferentem’ rule).
– **Article 1377, Civil Code:** Interpretation of obscure stipulations against the drafting party.
– **Legal Precedents:** Referenced for construing contracts for insurance claims involving non-payment or delayed premium deductions.
**Historical Background:**
This decision came during a period when government insurance policies were becoming common for civil employees. Interpretations by courts significantly influenced how employees and their families understood their protections. The case reflects mid-20th-century jurisprudence focusing on equitable treatment of insured individuals versus formalistic adherence to contract terms.
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