1.)VIRGINIA A. PEREZ, petitioner, vs.

COURT OF APPEALS and BF

LIFEMAN INSURANCE CORPORATION, respondents. G.R. No.
112329
January 28, 2000
YNARES-SANTIAGO, J.:

insurance policy. In its letter' of January 29, 1988 to Virginia A. Perez,

the insurance company maintained that the insurance for P50,000.00
had not been perfected at the time of the death of Primitivo Perez.
Consequently, the insurance company refunded the amount of
P2,075.00 which Virginia Perez had paid.

A contract of insurance, like all other contracts, must be assented to by

both parties, either in person or through their agents and so long as an
application for insurance has not been either accepted or rejected, it is
merely a proposal or an offer to make a contract.

On September 21, 1990, private respondent BF Lifeman Insurance

Corporation filed a complaint against Virginia A. Perez seeking the
rescission and declaration of nullity of the insurance contract in
question.

Petitioner Virginia A. Perez assails the decision of respondent Court of

Appeals dated July 9, 1993 in CA-G.R. CV 35529 entitled, "BF Lifeman
Insurance Corporations; Plaintiff-Appellant versus Virginia A. Perez.
Defendant-Appellee," which declared Insurance Policy 056300 for
P50,000.00 issued by private respondent corporation in favor of the
deceased Primitivo B. Perez, null and void and rescinded, thereby
reversing the decision rendered by the Regional Trial Court of Manila,
Branch XVI.

Petitioner Virginia A. Perez, on the other hand, averred that the

deceased had fulfilled all his prestations under the contract and all the
elements of a valid contract are present. She then filed a counterclaim
against private respondent for the collection of P150,000.00 as actual
damages, P100,000.00 as exemplary damages, P30,000.00 as
attorney's fees and P10,000.00 as expenses for litigation.

The facts of the case as summarized by respondent Court of Appeals

are not in dispute.
Primitivo B. Perez had been insured with the BF Lifeman Insurance
Corporation since 1980 for P20,000.00. Sometime in October 1987, an
agent of the insurance corporation, Rodolfo Lalog, visited Perez in
Guinayangan, Quezon and convinced him to apply for additional
insurance coverage of P50,000.00, to avail of the ongoing promotional
discount of P400.00 if the premium were paid annually.1wphi1.nt

On October 25, 1991, the trial court rendered a decision in favor of

petitioner, the dispositive portion of which reads as follows:
WHEREFORE PREMISES CONSIDERED, judgment is
hereby rendered in favor of defendant Virginia A. Perez,
ordering the plaintiff BF Lifeman Insurance Corporation to
pay to her the face value of BF Lifeman Insurance Policy No.
056300, plus double indemnity under the SARDI or in the
total amount of P150,000.00 (any refund made and/or
premium deficiency to be deducted therefrom).
SO ORDERED.5

On October 20, 1987, Primitivo B. Perez accomplished an application

form for the additional insurance coverage of P50,000.00. On the same
day, petitioner Virginia A. Perez, Primitivo's wife, paid P2,075.00 to
Lalog. The receipt issued by Lalog indicated the amount received was
a "deposit."1 Unfortunately, Lalog lost the application form
accomplished by Perez and so on October 28, 1987, he asked the
latter to fill up another application form. 2 On November 1, 1987, Perez
was made to undergo the required medical examination, which he
passed.3
Pursuant to the established procedure of the company, Lalog
forwarded the application for additional insurance of Perez, together
with all its supporting papers, to the office of BF Lifeman Insurance
Corporation at Gumaca, Quezon which office was supposed to forward
the papers to the Manila office.
On November 25, 1987, Perez died in an accident. He was riding in a
banca which capsized during a storm. At the time of his death, his
application papers for the additional insurance of P50,000.00 were still
with the Gumaca office. Lalog testified that when he went to follow up
the papers, he found them still in the Gumaca office and so he
personally brought the papers to the Manila office of BF Lifeman
Insurance Corporation. It was only on November 27, 1987 that said
papers were received in Manila.
Without knowing that Perez died on November 25, 1987, BF Lifeman
Insurance Corporation approved the application and issued the
corresponding policy for the P50,000.00 on December 2, 1987.4
Petitioner Virginia Perez went to Manila to claim the benefits under the
insurance policies of the deceased. She was paid P40,000.00 under
the first insurance policy for P20,000.00 (double indemnity in case of
accident) but the insurance company refused to pay the claim under
the additional policy coverage of P50,000.00, the proceeds of which
amount to P150,000.00 in view of a triple indemnity rider on the

The trial court, in ruling for petitioner, held that the premium for the
additional insurance of P50,000.00 had been fully paid and even if the
sum of P2,075.00 were to be considered merely as partial payment,
the same does not affect the validity of the policy. The trial court further
stated that the deceased had fully complied with the requirements of
the insurance company. He paid, signed the application form and
passed the medical examination. He should not be made to suffer the
subsequent delay in the transmittal of his application form to private
respondent's head office since these were no longer within his control.
The Court of Appeals, however, reversed the decision of the trial court
saying that the insurance contract for P50,000.00 could not have been
perfected since at the time that the policy was issued, Primitivo was
already dead.6 Citing the provision in the application form signed by
Primitivo which states that:
. . . there shall be no contract of insurance unless and until a
policy is issued on this application and that the policy shall
not take effect until the first premium has been paid and the
policy has been delivered to and accepted by me/us in
person while I/we, am/are in good health
the Court of Appeals held that the contract of insurance had to be
assented to by both parties and so long as the application for
insurance has not been either accepted or rejected, it is merely an
offer or proposal to make a contract.

Petitioner's motion for reconsideration having been denied by

respondent court, the instant petition for certiorariwas filed on the
ground that there was a consummated contract of insurance between
the deceased and BF Lifeman Insurance Corporation and that the
condition that the policy issued by the corporation be delivered and
received by the applicant in good health, is potestative, being
dependent upon the will of the insurance company, and is therefore
null and void.
The petition is bereft of merit.
Insurance is a contract whereby, for a stipulated consideration, one
party undertakes to compensate the other for loss on a specified
subject by specified perils.7 A contract, on the other hand, is a meeting
of the minds between two persons whereby one binds himself, with
respect to the other to give something or to render some
service.8Under Article 1318 of the Civil Code, there is no contract
unless the following requisites concur:

Petitioner insists that the condition imposed by respondent corporation

that a policy must have been delivered to and accepted by the
proposed insured in good health is potestative being dependent upon
the will of the corporation and is therefore null and void.
We do not agree.
A potestative condition depends upon the exclusive will of one of the
parties. For this reason, it is considered void. Article 1182 of the New
Civil Code states: When the fulfillment of the condition depends upon
the sole will the debtor, the conditional obligation shall be void.
In the case at bar, the following conditions were imposed by the
respondent company for the perfection of the contract of insurance:
(a) a policy must have been issued;
(b) the premiums paid; and

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Consent must be manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute.
When Primitivo filed an application for insurance, paid P2,075.00 and
submitted the results of his medical examination, his application was
subject to the acceptance of private respondent BF Lifeman Insurance
Corporation. The perfection of the contract of insurance between the
deceased and respondent corporation was further conditioned upon
compliance with the following requisites stated in the application form:
there shall be no contract of insurance unless and until a
policy is issued on this application and that the said policy
shall not take effect until the premium has been paid and the
policy delivered to and accepted by me/us in person while
I/We, am/are in good health.9
The assent of private respondent BF Lifeman Insurance Corporation
therefore was not given when it merely received the application form
and all the requisite supporting papers of the applicant. Its assent was
given when it issues a corresponding policy to the applicant. Under the
abovementioned provision, it is only when the applicant pays the
premium and receives and accepts the policy while he is in good
health that the contract of insurance is deemed to have been
perfected.
It is not disputed, however, that when Primitivo died on November 25,
1987, his application papers for additional insurance coverage were
still with the branch office of respondent corporation in Gumaca and it
was only two days later, or on November 27, 1987, when Lalog
personally delivered the application papers to the head office in Manila.
Consequently, there was absolutely no way the acceptance of the
application could have been communicated to the applicant for the
latter to accept inasmuch as the applicant at the time was already
dead. In the case of Enriquez vs. Sun Life Assurance Co. of
Canada,10 recovery on the life insurance of the deceased was
disallowed on the ground that the contract for annuity was not
perfected since it had not been proved satisfactorily that the
acceptance of the application ever reached the knowledge of the
applicant.

(c) the policy must have been delivered to and accepted by

the applicant while he is in good health.
The condition imposed by the corporation that the policy must have
been delivered to and accepted by the applicant while he is in good
health can hardly be considered as a potestative or facultative
condition. On the contrary, the health of the applicant at the time of the
delivery of the policy is beyond the control or will of the insurance
company. Rather, the condition is a suspensive one whereby the
acquisition of rights depends upon the happening of an event which
constitutes the condition. In this case, the suspensive condition was
the policy must have been delivered and accepted by the applicant
while he is in good health. There was non-fulfillment of the condition,
however, inasmuch as the applicant was already dead at the time the
policy was issued. Hence, the non-fulfillment of the condition resulted
in the non-perfection of the contract.
As stated above, a contract of insurance, like other contracts, must be
assented to by both parties either in person or by their agents. So long
as an application for insurance has not been either accepted or
rejected, it is merely an offer or proposal to make a contract. The
contract, to be binding from the date of application, must have been a
completed contract, one that leaves nothing to be done, nothing to be
completed, nothing to be passed upon, or determined, before it shall
take effect. There can be no contract of insurance unless the minds of
the parties have met in agreement.11
Prescinding from the foregoing, respondent corporation cannot be held
liable for gross negligence. It should be noted that an application is a
mere offer which requires the overt act of the insurer for it to ripen into
a contract. Delay in acting on the application does not constitute
acceptance even though the insured has forwarded his first premium
with his application. The corporation may not be penalized for the
delay in the processing of the application papers. Moreover, while it
may have taken some time for the application papers to reach the main
office, in the case at bar, the same was acted upon less than a week
after it was received. The processing of applications by respondent
corporation normally takes two to three weeks, the longest being a
month.12 In this case, however, the requisite medical examination was
undergone by the deceased on November 1, 1987; the application
papers were forwarded to the head office on November 27, 1987; and
the policy was issued on December 2, 1987. Under these
circumstances, we hold that the delay could not be deemed
unreasonable so as to constitute gross negligence.

A final note. It has not escaped our notice that the Court of Appeals
declared Insurance Policy 056300 for P50,000.00 null and void and
rescinded. The Court of Appeals corrected this in its Resolution of the
motion for reconsideration filed by petitioner, thus:

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.

Anent the appearance of the word "rescinded" in the

dispositive portion of the decision, to which defendantappellee attaches undue significance and makes capital of, it
is clear that the use of the words "and rescinded" is, as it is
hereby declared, a superfluity. It is apparent from the context
of the decision that the insurance policy in question was
found null and void, and did not have to be "rescinded".13

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

True, rescission presupposes the existence of a valid contract. A

contract which is null and void is no contract at all and hence could not
be the subject of rescission.
WHEREFORE, the decision rendered by the Court of Appeals in CAG.R. CV No. 35529 is AFFIRMED insofar as it declared Insurance
Policy No. 056300 for P50,000.00 issued by BF Lifeman Insurance
Corporation of no force and effect and hence null and void. No costs.
SO ORDERED.
2.)FINMAN GENERAL ASSURANCE CORPORATION, petitioner, vs.
THE
HONORABLE
COURT
OF
APPEALS
and
JULIA
SURPOSA, respondents. G.R. No. 100970 September 2, 1992
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

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.
3.) VIRGINIA CALANOC, petitioner, vs. COURT OF APPEALS and
THE PHILIPPINE AMERICAN LIFE INSURANCE CO., respondents. .)
G.R. No. L-8151
December 16, 1955
BAUTISTA ANGELO, J.:
This suit involves the collection of P2,000 representing the value of a
supplemental policy covering accidental death which was secured by
one Melencio Basilio from the Philippine American Life Insurance
Company. The case originated in the Municipal Court of Manila and
judgment being favorable to the plaintiff it was appealed to the court of
first instance. The latter court affirmed the judgment but on appeal to

the Court of Appeals the judgment was reversed and the case is now
before us on a petition for review.
Melencio Basilio was a watchman of the Manila Auto Supply located at
the corner of Avenida Rizal and Zurbaran. He secured a life insurance
policy from the Philippine American Life Insurance Company in the
amount of P2,000 to which was attached a supplementary contract
covering death by accident. On January 25, 1951, he died of a gunshot
wound on the occasion of a robbery committed in the house of Atty.
Ojeda at the corner of Oroquieta and Zurbaan streets. Virginia
Calanoc, the widow, was paid the sum of P2,000, face value of the
policy, but when she demanded the payment of the additional sum of
P2,000 representing the value of the supplemental policy, the company
refused alleging, as main defense, that the deceased died because he
was murdered by a person who took part in the commission of the
robbery and while making an arrest as an officer of the law which
contingencies were expressly excluded in the contract and have the
effect of exempting the company from liability.
The pertinent facts which need to be considered for the determination
of the questions raised are those reproduced in the decision of the
Court of Appeals as follows:
The circumstances surrounding the death of Melencio
Basilio show that when he was killed at about seven o'clock
in the night of January 25, 1951, he was on duty as
watchman of the Manila Auto Supply at the corner of
Avenida Rizal and Zurbaran; that it turned out that Atty.
Antonio Ojeda who had his residence at the corner of
Zurbaran and Oroquieta, a block away from Basilio's station,
had come home that night and found that his house was
well-lighted, but with the windows closed; that getting
suspicious that there were culprits in his house, Atty. Ojeda
retreated to look for a policeman and finding Basilio in khaki
uniform, asked him to accompany him to the house with the
latter refusing on the ground that he was not a policeman,
but suggesting that Atty. Ojeda should ask the traffic
policeman on duty at the corner of Rizal Avenue and
Zurbaran; that Atty. Ojeda went to the traffic policeman at
said corner and reported the matter, asking the policeman to
come along with him, to which the policeman agreed; that on
the way to the Ojeda residence, the policeman and Atty.
Ojeda passed by Basilio and somehow or other invited the
latter to come along; that as the tree approached the Ojeda
residence and stood in front of the main gate which was
covered with galvanized iron, the fence itself being partly
concrete and partly adobe stone, a shot was fired; that
immediately after the shot, Atty. Ojeda and the policeman
sought cover; that the policeman, at the request of Atty.
Ojeda, left the premises to look for reinforcement; that it
turned out afterwards that the special watchman Melencio
Basilio was hit in the abdomen, the wound causing his
instantaneous death; that the shot must have come from
inside the yard of Atty. Ojeda, the bullet passing through a
hole waist-high in the galvanized iron gate; that upon inquiry
Atty. Ojeda found out that the savings of his children in the
amount of P30 in coins kept in his aparador contained in
stockings were taken away, the aparador having been
ransacked; that a month thereafter the corresponding
investigation conducted by the police authorities led to the
arrest and prosecution of four persons in Criminal Case No.
15104 of the Court of First Instance of Manila for 'Robbery in
an Inhabited House and in Band with Murder'.
It is contended in behalf of the company that Basilio was killed which
"making an arrest as an officer of the law" or as a result of an "assault
or murder" committed in the place and therefore his death was caused

by one of the risks excluded by the supplementary contract which

exempts the company from liability. This contention was upheld by the
Court of Appeals and, in reaching this conclusion, made the following
comment:
From the foregoing testimonies, we find that the deceased
was a watchman of the Manila Auto Supply, and, as such, he
was not boud to leave his place and go with Atty. Ojeda and
Policeman Magsanoc to see the trouble, or robbery, that
occurred in the house of Atty. Ojeda. In fact, according to the
finding of the lower court, Atty. Ojeda finding Basilio in
uniform asked him to accompany him to his house, but the
latter refused on the ground that he was not a policeman and
suggested to Atty. Ojeda to ask help from the traffic
policeman on duty at the corner of Rizal Avenue and
Zurbaran, but after Atty. Ojeda secured the help of the traffic
policeman, the deceased went with Ojeda and said traffic
policeman to the residence of Ojeda, and while the
deceased was standing in front of the main gate of said
residence, he was shot and thus died. The death, therefore,
of Basilio, although unexpected, was not caused by an
accident, being a voluntary and intentional act on the part of
the one wh robbed, or one of those who robbed, the house
of Atty. Ojeda. Hence, it is out considered opinion that the
death of Basilio, though unexpected, cannot be considered
accidental, for his death occurred because he left his post
and joined policeman Magsanoc and Atty. Ojeda to repair to
the latter's residence to see what happened thereat.
Certainly, when Basilio joined Patrolman Magsanoc and Atty.
Ojeda, he should have realized the danger to which he was
exposing himself, yet, instead of remaining in his place, he
went with Atty. Ojeda and Patrolman Magsanoc to see what
was the trouble in Atty. Ojeda's house and thus he was
fatally shot.
We dissent from the above findings of the Court of Appeals. For one
thing, Basilio was a watchman of the Manila Auto Supply which was a
block away from the house of Atty. Ojeda where something suspicious
was happening which caused the latter to ask for help. While at first he
declied the invitation of Atty. Ojeda to go with him to his residence to
inquire into what was going on because he was not a regular
policeman, he later agreed to come along when prompted by the traffic
policeman, and upon approaching the gate of the residence he was
shot and died. The circumstance that he was a mere watchman and
had no duty to heed the call of Atty. Ojeda should not be taken as a
capricious desire on his part to expose his life to danger considering
the fact that the place he was in duty-bound to guard was only a block
away. In volunteering to extend help under the situation, he might have
thought, rightly or wrongly, that to know the truth was in the interest of
his employer it being a matter that affects the security of the
neighborhood. No doubt there was some risk coming to him in
pursuing that errand, but that risk always existed it being inherent in
the position he was holding. He cannot therefore be blamed solely for
doing what he believed was in keeping with his duty as a watchman
and as a citizen. And he cannot be considered as making an arrest as
an officer of the law, as contended, simply because he went with the
traffic policeman, for certainly he did not go there for that purpose nor
was he asked to do so by the policeman.
Much less can it be pretended that Basilio died in the course of an
assault or murder considering the very nature of these crimes. In the
first place, there is no proof that the death of Basilio is the result of
either crime for the record is barren of any circumstance showing how
the fatal shot was fired. Perhaps this may be clarified in the criminal
case now pending in court as regards the incident but before that is
done anything that might be said on the point would be a mere
conjecture. Nor can it be said that the killing was intentional for there is

the possibility that the malefactor had fired the shot merely to scare
away the people around for his own protection and not necessarily to
kill or hit the victim. In any event, while the act may not excempt the
triggerman from liability for the damage done, the fact remains that the
happening was a pure accident on the part of the victim. The victim
could have been either the policeman or Atty. Ojeda for it cannot be
pretended that the malefactor aimed at the deceased precisely
because he wanted to take his life.
We take note that these defenses are included among the risks
exluded in the supplementary contract which enumerates the cases
which may exempt the company from liability. While as a general rule
"the parties may limit the coverage of the policy to certain particular
accidents and risks or causes of loss, and may expressly except other
risks or causes of loss therefrom" (45 C. J. S. 781-782), however, it is
to be desired that the terms and phraseology of the exception clause
be clearly expressed so as to be within the easy grasp and
understanding of the insured, for if the terms are doubtful or obscure
the same must of necessity be interpreted or resolved aganst the one
who has caused the obscurity. (Article 1377, new Civil Code) And so it
has bene generally held that the "terms in an insurance policy, which
are ambiguous, equivacal, or uncertain . . . are to be construed strictly
and most strongly against the insurer, and liberally in favor of the
insured so as to effect the dominant purpose of indemnity or payment
to the insured, especially where a forfeiture is involved" (29 Am. Jur.,
181), and the reason for this rule is that he "insured usually has no
voice in the selection or arrangement of the words employed and that
the language of the contract is selected with great care and
deliberation by experts and legal advisers employed by, and acting
exclusively in the interest of, the insurance company." (44 C. J. S., p.
1174.)
Insurance is, in its nature, complex and difficult for the
layman to understand. Policies are prepared by experts who
know and can anticipate the bearings and possible
complications of every contingency. So long as insurance
companies insist upon the use of ambiguous, intricate and
technical provisions, which conceal rather than frankly
disclose, their own intentions, the courts must, in fairness to
those who purchase insurance, construe every ambiguity in
favor of the insured. (Algoe vs. Pacific Mut. L. Ins. Co., 91
Wash. 324, LRA 1917A, 1237.)lawphi1.net
An insurer should not be allowed, by the use of obscure
phrases and exceptions, to defeat the very purpose for
which the policy was procured. (Moore vs. Aetna Life
Insurance Co., LRA 1915D, 264.)
We are therefore persuaded to conclude that the circumstances
unfolded in the present case do not warrant the finding that the death
of the unfortunate victim comes within the purview of the exception
clause of the supplementary policy and, hence, do not exempt the
company from liability.
WHEREFORE, reversing the decision appealed from, we hereby order
the company to pay petitioner-appellant the amount of P2,000, with
legal interest from January 26, 1951 until fully paid, with costs.
4.) SUN INSURANCE OFFICE, LTD., petitioner, vs.THE HON.
COURT OF APPEALS and NERISSA LIM, respondents. G.R. No.
92383 July 17, 1992
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 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 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. Insubstance, 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 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.
5.) RAFAEL ENRIQUEZ, as administrator of the estate of the late
Joaquin Ma. Herrer, plaintiff-appellant, vs. SUN LIFE ASSURANCE
COMPANY OF CANADA, defendant-appellee. G.R. No. L-15895
November 29, 1920
MALCOLM, J.:
This is an action brought by the plaintiff ad administrator of the estate
of the late Joaquin Ma. Herrer to recover from the defendant life
insurance company the sum of pesos 6,000 paid by the deceased for a
life annuity. The trial court gave judgment for the defendant. Plaintiff
appeals.
The undisputed facts are these: On September 24, 1917, Joaquin
Herrer made application to the Sun Life Assurance Company of
Canada through its office in Manila for a life annuity. Two days later he
paid the sum of P6,000 to the manager of the company's Manila office
and was given a receipt reading as follows:
MANILA, I. F., 26 de septiembre, 1917.
PROVISIONAL RECEIPT Pesos 6,000
Recibi la suma de seis mil pesos de Don Joaquin Herrer de Manila
como prima dela Renta Vitalicia solicitada por dicho Don Joaquin
Herrer hoy, sujeta al examen medico y aprobacion de la Oficina
Central de la Compaia.
The application was immediately forwarded to the head office of the
company at Montreal, Canada. On November 26, 1917, the head office
gave notice of acceptance by cable to Manila. (Whether on the same
day the cable was received notice was sent by the Manila office of
Herrer that the application had been accepted, is a disputed point,
which will be discussed later.) On December 4, 1917, the policy was
issued at Montreal. On December 18, 1917, attorney Aurelio A. Torres
wrote to the Manila office of the company stating that Herrer desired to
withdraw his application. The following day the local office replied to
Mr. Torres, stating that the policy had been issued, and called attention
to the notification of November 26, 1917. This letter was received by
Mr. Torres on the morning of December 21, 1917. Mr. Herrer died on
December 20, 1917.
As above suggested, the issue of fact raised by the evidence is
whether Herrer received notice of acceptance of his application. To
resolve this question, we propose to go directly to the evidence of
record.
The chief clerk of the Manila office of the Sun Life Assurance Company
of Canada at the time of the trial testified that he prepared the letter
introduced in evidence as Exhibit 3, of date November 26, 1917, and
handed it to the local manager, Mr. E. E. White, for signature. The
witness admitted on cross-examination that after preparing the letter
and giving it to he manager, he new nothing of what became of it. The
local manager, Mr. White, testified to having received the cablegram
accepting the application of Mr. Herrer from the home office on
November 26, 1917. He said that on the same day he signed a letter
notifying Mr. Herrer of this acceptance. The witness further said that

letters, after being signed, were sent to the chief clerk and placed on
the mailing desk for transmission. The witness could not tell if the letter
had every actually been placed in the mails. Mr. Tuason, who was the
chief clerk, on November 26, 1917, was not called as a witness. For
the defense, attorney Manuel Torres testified to having prepared the
will of Joaquin Ma. Herrer, that on this occasion, Mr. Herrer mentioned
his application for a life annuity, and that he said that the only
document relating to the transaction in his possession was the
provisional receipt. Rafael Enriquez, the administrator of the estate,
testified that he had gone through the effects of the deceased and had
found no letter of notification from the insurance company to Mr.
Herrer.
Our deduction from the evidence on this issue must be that the letter of
November 26, 1917, notifying Mr. Herrer that his application had been
accepted, was prepared and signed in the local office of the insurance
company, was placed in the ordinary channels for transmission, but as
far as we know, was never actually mailed and thus was never
received by the applicant.
Not forgetting our conclusion of fact, it next becomes necessary to
determine the law which should be applied to the facts. In order to
reach our legal goal, the obvious signposts along the way must be
noticed.
Until quite recently, all of the provisions concerning life insurance in the
Philippines were found in the Code of Commerce and the Civil Code.
In the Code of the Commerce, there formerly existed Title VIII of Book
III and Section III of Title III of Book III, which dealt with insurance
contracts. In the Civil Code there formerly existed and presumably still
exist, Chapters II and IV, entitled insurance contracts and life annuities,
respectively, of Title XII of Book IV. On the after July 1, 1915, there
was, however, in force the Insurance Act. No. 2427. Chapter IV of this
Act concerns life and health insurance. The Act expressly repealed
Title VIII of Book II and Section III of Title III of Book III of the code of
Commerce. The law of insurance is consequently now found in the
Insurance Act and the Civil Code.
While, as just noticed, the Insurance Act deals with life insurance, it is
silent as to the methods to be followed in order that there may be a
contract of insurance. On the other hand, the Civil Code, in article
1802, not only describes a contact of life annuity markedly similar to
the one we are considering, but in two other articles, gives strong clues
as to the proper disposition of the case. For instance, article 16 of the
Civil Code provides that "In matters which are governed by special
laws, any deficiency of the latter shall be supplied by the provisions of
this Code." On the supposition, therefore, which is incontestable, that
the special law on the subject of insurance is deficient in enunciating
the principles governing acceptance, the subject-matter of the Civil
code, if there be any, would be controlling. In the Civil Code is found
article 1262 providing that "Consent is shown by the concurrence of
offer and acceptance with respect to the thing and the consideration
which are to constitute the contract. An acceptance made by letter
shall not bind the person making the offer except from the time it came
to his knowledge. The contract, in such case, is presumed to have
been entered into at the place where the offer was made." This latter
article is in opposition to the provisions of article 54 of the Code of
Commerce.

If no mistake has been made in announcing the successive steps by

which we reach a conclusion, then the only duty remaining is for the
court to apply the law as it is found. The legislature in its wisdom
having enacted a new law on insurance, and expressly repealed the
provisions in the Code of Commerce on the same subject, and having
thus left a void in the commercial law, it would seem logical to make
use of the only pertinent provision of law found in the Civil code,
closely related to the chapter concerning life annuities.
The Civil Code rule, that an acceptance made by letter shall bind the
person making the offer only from the date it came to his knowledge,
may not be the best expression of modern commercial usage. Still it
must be admitted that its enforcement avoids uncertainty and tends to
security. Not only this, but in order that the principle may not be taken
too lightly, let it be noticed that it is identical with the principles
announced by a considerable number of respectable courts in the
United States. The courts who take this view have expressly held that
an acceptance of an offer of insurance not actually or constructively
communicated to the proposer does not make a contract. Only the
mailing of acceptance, it has been said, completes the contract of
insurance, as the locus poenitentiae is ended when the acceptance
has passed beyond the control of the party. (I Joyce, The Law of
Insurance, pp. 235, 244.)
In resume, therefore, the law applicable to the case is found to be the
second paragraph of article 1262 of the Civil Code providing that an
acceptance made by letter shall not bind the person making the offer
except from the time it came to his knowledge. The pertinent fact is,
that according to the provisional receipt, three things had to be
accomplished by the insurance company before there was a contract:
(1) There had to be a medical examination of the applicant; (2) there
had to be approval of the application by the head office of the
company; and (3) this approval had in some way to be communicated
by the company to the applicant. The further admitted facts are that the
head office in Montreal did accept the application, did cable the Manila
office to that effect, did actually issue the policy and did, through its
agent in Manila, actually write the letter of notification and place it in
the usual channels for transmission to the addressee. The fact as to
the letter of notification thus fails to concur with the essential elements
of the general rule pertaining to the mailing and delivery of mail matter
as announced by the American courts, namely, when a letter or other
mail matter is addressed and mailed with postage prepaid there is a
rebuttable presumption of fact that it was received by the addressee as
soon as it could have been transmitted to him in the ordinary course of
the mails. But if any one of these elemental facts fails to appear, it is
fatal to the presumption. For instance, a letter will not be presumed to
have been received by the addressee unless it is shown that it was
deposited in the post-office, properly addressed and stamped. (See 22
C.J., 96, and 49 L. R. A. [N. S.], pp. 458, et seq., notes.)
We hold that the contract for a life annuity in the case at bar was not
perfected because it has not been proved satisfactorily that the
acceptance of the application ever came to the knowledge of the
applicant.lawph!l.net
Judgment is reversed, and the plaintiff shall have and recover from the
defendant the sum of P6,000 with legal interest from November 20,
1918, until paid, without special finding as to costs in either instance.
So ordered.
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