G.R. No. 12189. April 29, 1960
FRANCISCA GALLARDO, PLAINTIFF AND APPELLEE, VS. HERMENEGILDA S. MORALES, DEFENDANT AND APPELLANT.
CONCEPCION, J.:
“insured 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 only
P150.00. 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. B. 75, 76, 100 Ga. 142.””
‘Life insurance includes all policies of insurance 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. vs. Girard 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 debts,
proceeds of policy insuring against death by accident insured to
widow’s benefit free from husband’s debts. Code 1982, B 8456. American
Trust & Banking Co. vs. Lessly, 106 S.W. 2d 551, 171 Term. 511 III A.L.E. ’59.”“Insurance
policy, providing for payment in case of accidental death, is ‘life
insurance policy’ to such extent within state statute prescribing
in-contestable period, for such policies. Code Q.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, e. 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, e. 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, 202.)“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 awl 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, 562.)“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. 10, 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 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 creditor.
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. I, 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.
Paras, C.J., Bengzon, Bautista Angelo, Labrador, Endencia, Barrera, and Gutierrez David, JJ., concur.
[a] The policy was for P50,000.00, but defendant had assigned her rights, as regards the sum of P20,000.00, to another person.