COMMISSIONER OF INTERNAL REVENUE, Petitioner,

v. MANILA BANKERS' LIFE INSURANCE

CORPORATION, Respondent.
LEONARDO-DE CASTRO, J.
FACTS:
On December 14, 1999, based on the findings of its
Revenue Officers, the petitioner BIR issued a Preliminary
Assessment Notice against the respondent Manila
Bankers Life Insurance Corporation for its deficiency
internal revenue taxes for the year 1997.The respondent
agreed to all the assessments issued against it except to
the amount ofP2, 351,680.90 representing deficiency
documentary stamp taxes on its policy premiums and
penalties. Thus, on January 4, 2000, the petitioner issued
against the respondent a Formal Letter of Demand with
the corresponding Assessment Notices attached.
On February 3, 2000, the respondent filed its Letter of
Protest with the Bureau of Internal Revenue (BIR)
contesting the assessment for deficiency documentary
stamp tax on its insurance policy premiums. It remained
enacted upon, and thus, on October 26, 2000, the
respondent filed a Petition for Review with the CTA for
the cancellation of Assessment Notice. The CTA granted
the petition, which the CA affirmed. Thus, this petition
filed by the CIR.
The deficiency documentary stamp tax was assessed on
the increases in the life insurance coverage of two kinds
of policies: the "Money Plus Plan," which is an ordinary
term life insurance policy; and the group life insurance
policy. The Money Plus Plan is a 20-year term ordinary
life insurance plan with a "Guaranteed Continuity Clause"
which allowed the policy holder to continue the policy
after the 20-year term subject to certain conditions.
Under the plan, the policy holders paid their premiums in
five separate periods, with the premium payments, after
the first period premiums, to be made only upon
reaching a certain age. The succeeding premium
payments translated to increases in the sum assured.
Thus, the petitioner believed that since the documentary
stamp tax was affixed on the policy based only on the
first period premiums, then the succeeding premium
payments should likewise be subject to documentary
stamp tax.
In the case of respondents group insurance, the
deficiency documentary stamp tax was imposed on the
premiums for the additional members to already existing
and effective master policies. The petitioner concluded
that any additional member to the group of employees,
who were already insured under the existing mother
policy, should similarly be subjected to documentary
stamp tax.
ISSUE: Whether or not documentary stamp tax should be
imposed on increase due to additional premiums in the
Money Plus Plan and the group insurance plan
HELD:
The petition is granted.
TAXATION: Documentary stamp tax on insurance
policies.
Under Section 173 of the Tax Code, the documentary
stamp tax becomes due and payable at the time the
insurance policy is issued, with the tax based on the
amount insured by the policy as provided for in Section
183. The provision which specifically applies to renewals
of life insurance policies is Section 183, which states that
on all policies of insurance or other instruments by
whatever name the same may be called, whereby any
insurance shall be made or renewed upon any life or
lives, there shall be collected a documentary stamp tax.
Here, it is clear from the text of the guaranteed
continuity clause that what the respondent was actually
offering in its Money Plus Plan was the option to renew
the policy, after the expiration of its original term.
Consequently, the acceptance of this offer would give
rise to the renewal of the original policy. We cannot agree
with the CTA in its holding that "the renewal, is in effect
treated as an increase in the sum assured since no new
insurance policy was issued." The renewal was not

meant to restore the original terms of an old agreement,

but instead it was meant to extend the life of an existing
agreement, with some of the contracts terms modified.
This renewal was still subject to the acceptance and to
the conditions of both the insured and the respondent.
Thus, it was subject to the imposition of documentary
stamp tax under Section 183as insurance renewed upon
the life of the insured.
With regard to the group policy, the respondent asserts
that since the documentary stamp tax, by its nature, is
paid at the time of the issuance of the policy, "then there
can be no other imposition on the same, regardless of
any change in the number of employees covered by the
existing group insurance. However, every time the
respondent registers and attaches another employee an
existing master policy, it exercises its privilege to
conduct its business of insurance and this is patently
subject to documentary stamp tax as insurance made
upon a life under Section 183. Whenever a master policy
admits of another member, another life is insured and
covered.
Petition is GRANTED and the decisions of the CTA and CA
are SET ASIDE.
Sun Life v. CA - Concealment in Insurance
245 SCRA 268 (1995)
Facts:
> On April 15, 1986, Bacani procured a life insurance
contract for himself from Sun Life. He was issued a life
insurance policy with double indemnity in case of
accidental death. The designated beneficiary was his
mother, Bernarda.
> On June 26, 1987, the insured died in a plane crash.
Bernarda Bacani filed a claim with Sun Life, seeking the
benefits of the insurance. Sun Life conducted an
investigation and its findings prompted it to reject the
claim.
> Sun Life discovered that 2 weeks prior to his
application, Bacani was examined and confined at the
Lung Center of the Philippines, where he was diagnosed
for renal failure. During his confinement, the deceased
was subjected to urinalysis, ultra-sonography and
hematology tests. He did not reveal such fact in his
application.
> In its letter, Sun Life informed Berarda, that the
insured did not disclosed material facts relevant to the
issuance of the policy, thus rendering the contract of
insurance voidable. A check representing the total
premiums paid in the amount of P10,172.00 was
attached to said letter.
> Bernarda and her husband, filed an action for specific
performance against Sun Life. RTC ruled for Bernarda
holding that the facts concealed by the insured were
made in good faith and under the belief that they need
not be disclosed. Moreover, it held that the health history
of the insured was immaterial since the insurance policy
was "non-medical." CA affirmed.
Issue:
Whether or not the beneficiary can claim despite the
concealment.
Held:
NOPE.
Section 26 of the Insurance Code is explicit in requiring a
party to a contract of insurance to communicate to the
other, in good faith, all facts within his knowledge which
are material to the contract and as to which he makes no
warranty, and which the other has no means of
ascertaining.
Materiality is to be determined not by the event, but
solely by the probable and reasonable influence of the
facts upon the party to whom communication is due, in
forming his estimate of the disadvantages of the
proposed contract or in making his inquiries (The
Insurance Code, Sec 31)
The terms of the contract are clear. The insured is
specifically required to disclose to the insurer matters
relating to his health. The information which the insured
failed to disclose were material and relevant to the
approval and the issuance of the insurance policy. The
matters concealed would have definitely affected

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petitioner's action on his application, either by approving

it with the corresponding adjustment for a higher
premium or rejecting the same. Moreover, a disclosure
may have warranted a medical examination of the
insured by petitioner in order for it to reasonably assess
the risk involved in accepting the application.
Thus, "good faith" is no defense in concealment. The
insured's failure to disclose the fact that he was
hospitalized for two weeks prior to filing his application
for insurance, raises grave doubts about his bonafides. It
appears that such concealment was deliberate on his
part.
DE LA CRUZ v. CAPITAL INSURANCE
17 SCRA 554
BARRERA; June 30, 1966
NATURE
Appeal from the decision of the CFI of Pangasinan
FACTS
- Eduardo de la Cruz, employed in the Itogon-Suyoc
Mines, Inc., was the holder of an accident insurance
policy underwritten by the Capital Insurance & Surety
Co., Inc., for the period beginning November 13, 1956 to
November 12, 1957.
- On January 1, 1957, the Itogon-Suyoc Mines, Inc.
sponsored a boxing contest wherein the insured Eduardo
de la Cruz participated.
- In the course of his bout, 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, but he
died as a result of hemorrhage, intracranial, left.
- Simon de la Cruz, the father and named beneficiary of
the insured, filed a claim with the insurance company for
payment of the indemnity, but it was denied.
- He instituted the action in the CFI 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
- The court rendered the decision in favor of the plaintiff,
hence, the present appeal.
ISSUE
WON the death of the insured was not accidental and,
therefore, not covered by insurance
HELD
NO
- 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 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.

- 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.
Disposition The decision appealed from is affirmed
FINMAN GENERAL ASSURANCE CORPORATION v. CA
(SURPOSA)
213 SCRA 493
NOCON; September 2, 1992
NATURE
Certiorari
FACTS
- Oct. 22, 1986: Carlie Surposa was insured with 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.
- 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 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 after attending
the celebration of the "Maskarra Annual Festival."
- Thereafter, Julia Surposa and the other beneficiaries of
said insurance policy filed a written notice of claim with
the FINMAN Corp which denied said claim contending
that murder and assault are not within the scope of the
coverage of the insurance policy.
- Feb. 24, 1989: Surposa filed a complaint with the
Insurance Commission which subsequently ordered
FINMAN to pay Surposa the proceeds of the policy with
interest.
- CA affirmed said decision.
ISSUE
WON CA committed GAD 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) [TF they cannot be made to indemnify the
Surposa heirs]
HELD
NO
- The record is barren of any circumstance showing how
the stab wound was inflicted. 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.
Reasoning
- De la Cruz vs. Capital Insurance & Surety Co., Inc
(1966)~ 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

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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.
Ratio 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.
- The personal accident insurance policy involved herein
specifically enumerated only 10 circumstances wherein
no liability attaches to FINMAN 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: the failure of the
FINMAN 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.
- A1377 NCC: The interpretation of obscure words or
stipulations in a contract shall not favor the party who
caused the obscurity.
- NPC vs. CA [1986]~ 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.
Disposition DENIED for lack of merit.

Insurance Case Digest: Gallardo V. Morales (1960)

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

FACTS:

CFI: Hermenegilda S. Morales to pay P7,000 to a

creditor Francisca Gallardo

writ of execution was issued and delivered to the

Sheriff who garnished and levied execution on the
sum of P7,000 out of the P30,000 due from the
Capital Insurance & Surety Co. Inc., to Morales as
beneficiary whose husband Luis Morales died
by assassination.

Morales asked the sheriff to quash and lift said

garnishment or levy on execution invoking Rule 39,
section 12, subdivision (k) of the Rules of Court but it
was denied.

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.

Morales appealed maintaining that it was a life

insurance for it insured her husband for injuries
and/or death as a result of murder or assault or
attempt thereat
ISSUE: W/N the insurance is a life insurance and not an
accident insurance

HELD: NO. order appealed from is reversed, and the

garnishment in dispute hereby set aside and quashed

the annual premium was for P15

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
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
Annex "1" of the opposition, shows that the
Capital Insurance and Surety Company Inc. is a nonlife 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
Accident vs Life Insurance Policy
accident policy - merely insures the
person from injury and or death resulting from
murder, assault, or an attempt thereat
Accident insurance
indemnity or casualty
contract
life insurance policy - what is insured is
the life of the subject for a definite number of years
life insurance
investment contract
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
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
includes accident
insurance, since life is insured under either contract
includes all policies of
insurance in which payment of insurance money is
contingent upon loss of life
"any life insurance"
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
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

Insurance Case Digest: Pineda V. CA (1993)

G.R. No. 105562 September 27, 1993

Lessons Applicable: Who Exercises Rights of Minor
Insured or Beneficiaries (Insurance)
Laws Applicable: Art. 225 Family Code

FACTS:

Prime Marine Services, Inc. (PMSI), a

crewing/manning outfit, procured Group PoIicy
from Insular Life Assurance Co., Ltd. to provide life
insurance coverage to its sea-based employees
enrolled under the plan.

February 17 1986: 6 employees of the PMSI

perished at sea when M/V Nemos, a Greek cargo
vessel, sunk somewhere in El Jadida, Morocco

The beneficiaries asked President and General

Manager of PMSI, Capt. Roberto Nuval and issued
him special powers of attorney authorizing him to
"follow up, ask, demand, collect and receive" for

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their benefit indemnities. It only verbally pertained

to the sinking of the fatal vessel

Unknown to them, however, the PMSI, in its

capacity as employer and policyholder of the life
insurance of its deceased workers, filed with formal
claims with their special power of attorney

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

Upon learning that they are entitled to the claim,

they sought to recover from Insular Life but it denied
on the ground that they already delivered to PMSI

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

Section 180 of the Insurance Code 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.

Insurance Commission: favored petitioners

The Insular Life Assurance Company appealed

stating that

(a) had no jurisdiction over the case

considering that the claims exceeded P100,000

(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.

CA: eliminated the award to minor beneficiaries

Dina Ayo and Lucia Lontok
ISSUE: W/N the minor beneficiaries award should be
eliminated

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.

HELD: YES. petition is GRANTED. CA Reversed. Insurance

Commission Reinstated.

Being special powers of attorney, they must be

strictly construed. 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.

Group Insurance

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
employer acts as a functionary in the
collection and payment of premiums and in
performing related duties
falling within the ambit of administration
of a group policy is the disbursement of insurance
payments by the employer to the employees
employee is in the position of a real
party to the master policy
employees is the true source of the
benefits, which are a form of additional
compensation to them
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
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
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.

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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.