G.R. No. L-28866. March 17, 1972 (Case Brief / Digest)

Fe de Joya Landicho et al. v. Government Service Insurance System, 150 Phil. 793 (1972)

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.

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.

– 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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