EN BANC

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

FRANCISCA GALLARDO, plaintiff-appellee, vs. HERMENEGILDA

S. MORALES, defendant-appellant.

Cajulis & Dolorfino for appellee.

Filemon Cajator for appellant.

SYLLABUS

1. EXECUTION EXEMPTION; PROCEEDS FROM INSURANCE

CONTRACTS AGAINST LOSS OF LIFE DUE TO ACCIDENTAL CAUSES OR TO
WILLFUL AND CRIMINAL ACT OF ANOTHER. — The exemption from execution
established in section 12, subdivision (k), Rule 39 of the Rules of Court,
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.

DECISION

CONCEPCION, J : p

The issue before us is whether a personal accident insurance which

"insures 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 due from the Capital Insurance & Surety Co., Inc., to said
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 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 threat, 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
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 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. E. 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 1932, B
8456. American Trust & Banking Co. vs. Lessly, 106 S.W. 2d 551, 171
Tenn. 511 III A.L.R. 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 S.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 pay
ment 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, c. 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,
c. 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, 262.)
"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
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 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 and 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, 552.)
"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. 40, 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
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 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 creditors. 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
Gutiérrez David, JJ., concur.

Footnotes
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.

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