PHILIPPINE HEALTH CARE PROVIDERS,
INC vs. COMMISSIONER OF INTERNAL
REVENUE (principal purpose and object test)
ACTION: MR and supplemental MR filed by
petitioner Philippine Health Care Providers, Inc. It
stemmed from a petition for review in (CTA) filed by
petitioner seeking the cancellation of the deficiency
VAT and DST assessments.
FACTS:
 Petitioner is a domestic corporation whose
primary purpose is [t]o establish, maintain,
conduct and operate a prepaid group practice
health care delivery system or a health
maintenance organization(HMO)
 Individuals enrolled in its health care
programs pay an annual membership fee and
are entitled to various preventive, diagnostic
and curative medical services provided by
its duly licensed physicians, specialists and
other professional technical staff
participating in the group practice health
delivery system at a hospital or clinic
owned, operated or accredited by it.
 On January 27, 2000, [CIR] sent petitioner a
formal demand letter and the corresponding
assessment notices demanding the payment
of deficiency taxes for the taxable years
1996 and 1997 in the total amount
of P224,702,641.18.
 The deficiency [documentary stamp tax
(DST)] assessment was imposed on
petitioners health care agreement with the
members of its health care program pursuant
to Section 185 of the 1997 Tax Code.
 Petitioner protested the assessment. As
respondent did not act on the protest,
petitioner filed a petition for review in the
Court of Tax Appeals (CTA) seeking the
cancellation of the deficiency VAT and DST
assessments.
 CTA: rendered a decision, which
partially granted the petition and
declared VAT Ruling No. [231]-88
void and without force and effect.
The 1996 and 1997 deficiency DST
assessment against petitioner were
CANCELLED AND SET ASIDE.
 CIR appealed the CTA decision and
claimed that petitioners health care
agreement was a contract of
insurance subject to DST under
Section 185 of the 1997 Tax Code.
 CA: petitioners health care
agreement was in the nature of a
non-life insurance contract subject to
DST. Petitioner moved for
reconsideration but the CA denied it.
Hence, petitioner filed this case.
 SC: In a decision dated June 12,
2008, the Court denied the petition
and affirmed the CAs decision.
 Petitioner filed the present motion
for reconsideration and supplemental
motion for reconsideration, asserting
the following arguments:
(a) The DST under Section 185 of
the National Internal Revenue
of 1997 is imposed only on a
company engaged in the
business of fidelity bonds and
other insurance
policies. Petitioner, as an
HMO, is a service provider,
not an insurance company.
xxx
ISSUE: Whether petitioner is engaged in an
insurance business whose healthcare agreements are
subject to DST under Sec. 185, NIRC
HELD: No. HEALTH MAINTENANCE
ORGANIZATIONS ARE NOT ENGAGED IN
THE INSURANCE BUSINESS
Two requisites must concur before the DST can
apply, namely: (1) the document must be a policy of
insurance or an obligation in the nature of
indemnity and (2) the maker should be
transacting the business of accident, fidelity,
employers liability, plate, glass, steam boiler, burglar,
elevator, automatic sprinkler, or other branch
of insurance (except life, marine, inland, and fire
insurance).
Section 2 (2) of PD[20] 1460 (otherwise
known as the Insurance Code) enumerates what
constitutes doing an insurance business or transacting
an insurance business:

a) making or proposing to
make, as insurer, any
insurance contract;
b) making or proposing to
make, as surety, any
contract of suretyship as a
vocation and not as
merely incidental to any
other legitimate business
or activity of the surety;
c) doing any kind of
business, including a
reinsurance business,
specifically recognized as
constituting the doing of
an insurance business
within the meaning of this
Code;
d) doing or proposing to do
any business in substance
equivalent to any of the
foregoing in a manner
designed to evade the
provisions of this Code.
In the application of the
provisions of this Code, the fact
that no profit is derived from the
making of insurance contracts,
agreements or transactions or that
no separate or direct consideration
is received therefore, shall not be
deemed conclusive to show that the
making thereof does not constitute
the doing or transacting of an
insurance business.
Various courts in the United States, whose
jurisprudence has a persuasive effect on our
decisions, have determined that HMOs are not in the
insurance business. One test that they have applied is
whether the assumption of risk and indemnification
of loss (which are elements of an insurance business)
are the principal object and purpose of the
organization or whether they are merely incidental to
its business. If these are the principal objectives, the
business is that of insurance. But if they are merely
incidental and service is the principal purpose, then
the business is not insurance.
Applying the principal object and purpose
test, there is significant American case law
supporting the argument that a corporation (such as
an HMO, whether or not organized for profit), whose
main object is to provide the members of a group
with health services [rather than the assumption of
insurance risk], is not engaged in the insurance
business.
As an HMO, it is its obligation to maintain
the good health of its members. Accordingly, its
health care programs are designed to prevent or
to minimize thepossibility of any assumption of
risk on its part. Thus, its undertaking under its
agreements is not to indemnify its members against
any loss or damage arising from a medical condition
but, on the contrary, to provide the health and
medical services needed to prevent such loss or
damage.
Overall, petitioner appears to provide
insurance-type benefits to its members (with respect
to its curative medical services), but these are
incidental to the principal activity of providing them
medical care. The insurance-like aspect of petitioners
business is miniscule compared to its noninsurance
activities. Therefore, since it substantially provides
health care services rather than insurance services, it
cannot be considered as being in the insurance
business.
Lastly, it is significant that petitioner, as an
HMO, is not part of the insurance industry. This is
evident from the fact that it is not supervised by the
Insurance Commission but by the Department of
Health.
Heirs of Loreto Maramag v. Maramag
ACTION: Petition for review on certiorari under
Rule 45 of the Rules, seeking to reverse and set aside
the Resolution of CA, dismissing petitioners appeal
for lack of jurisdiction. Case stems from a petition
filed against respondents with the RTC for revocation
and/or reduction of insurance proceeds for being void
and/or inofficious
FACTS:
 Petition alleges that:
(1)Petitioners were the legitimate wife and
children of Loreto Maramag (Loreto)
(2)Respondents were Loreto’s illegitimate
family Eva Maramag (Eva) was a concubine
of Loreto and a suspect in the killing of the
latter, thus, she is disqualified to receive any
proceeds from his insurance policies from
Insular Life (Insular) and Great Pacific Life
Assurance Corporation (Grepalife);
(3)illegitimate children, Odessa, Karl Brian,
and Trisha Angelie were entitled only to
one-half of the legitime of the legitimate
children, thus, the proceeds released to
Odessa and those to be released to Karl
Brian and Trisha Angelie were inofficious
and should be reduced; that petitioners could
not be deprived of their legitimes, which
should be satisfied first.
 Both Insular and Grepalife countered that
the insurance proceeds belong exclusively to
the designated beneficiaries in the policies,
not to the estate or to the heirs of the
insured. Grepalife also reiterated that it had
disqualified Eva as a beneficiary when it
ascertained that Loreto was legally married
to Vicenta Pangilinan Maramag.
 RTC: Case dismissed with respect
to defendants-beneficiaries-
illegitimate children Odessa, Karl
Brian and Trisha Maramag.
However, the designation of
defendant Eva as one of the
primary beneficiary in the
insurance taken by the late Loreto
is void under Art. 739 of the Civil
Code, thus, the insurance indemnity
that should be paid to her must go
to the legal heirs of the deceased.
 Insular and Grepalife moved for
reconsideration insofar as the
judgment orders them to turn over
the insurance proceeds to
petitioners-legal heirs.
 MR: Granted. RTC ruled that it is
only in cases where there are no
beneficiaries designated, or when
the only designated beneficiary is
disqualified, that the proceeds
should be paid to the estate of the
insured. As to the claim that the
proceeds to be paid to Loretos
illegitimate children should be
reduced based on the rules on
legitime, the trial court held that the
distribution of the insurance
proceeds is governed primarily by
the Insurance Code, and the
provisions of the Civil Code are
irrelevant and inapplicable
 CA: dismissed petitioners’ appeal.
 Hence this petition. Petitioners
contend that, even assuming Insular
disqualified Eva as a beneficiary,
her share should not have been
distributed to her children with
Loreto but, instead, awarded to
them, being the legitimate heirs of
the insured deceased, in accordance
with law and jurisprudence.
ISSUE: (A)re the members of the legitimate
family entitled to the proceeds of the
insurance for the concubine?
HELD: No, petition denied.
It is evident from the face of the complaint
that petitioners are not entitled to a favorable
judgment in light of Article 2011 of the Civil Code
which expressly provides that insurance contracts
shall be governed by special laws, i.e., the Insurance
Code. Section 53 of the Insurance Code states
SECTION 53. The
insurance proceeds shall be applied
exclusively to the proper interest of
the person in whose name or for
whose benefit it is made unless
otherwise specified in the policy.
Pursuant thereto, it is obvious that the only persons
entitled to claim the insurance proceeds are either the
insured, if still alive; or the beneficiary, if the insured
is already deceased, upon the maturation of the
policy. The exception to this rule is a situation where
the insurance contract was intended to benefit third
persons who are not parties to the same in the form of
favorable stipulations or indemnity. In such a case,
third parties may directly sue and claim from the  The next day, Masagana made its formal
insurer. demand for indemnification for the burned
insured properties. On the same day,
Petitioners are third parties to the insurance contracts defendant returned the five (5) manager's
with Insular and Grepalife and, thus, are not entitled checks stating in its letter that it was
to the proceeds thereof. Accordingly, respondents rejecting Masagana's claim on the following
Insular and Grepalife have no legal obligation to turn grounds:
over the insurance proceeds to petitioners.
“a) Said policies
The revocation of Eva as a beneficiary in one policy expired last May 22,
and her disqualification as such in another are of no 1992 and were not
moment considering that the designation of the renewed for another
illegitimate children as beneficiaries in Loretos term;
insurance policies remains valid. Because no legal
proscription exists in naming as beneficiaries the b) Defendant had put
children of illicit relationships by the insured, the plaintiff and its
shares of Eva in the insurance proceeds, whether alleged broker on
forfeited by the court in view of the prohibition on notice of non-renewal
donations under Article 739 of the Civil Code or by earlier; and
the insurers themselves for reasons based on the
c) The properties
insurance contracts, must be awarded to the said
covered by the said
illegitimate children, the designated beneficiaries, to
policies were burned
the exclusion of petitioners.
in a fire that took
place last June 13,
It is only in cases where the insured has not
1992, or before
designated any beneficiary, or when the designated
tender of premium
beneficiary is disqualified by law to receive the
payment."
proceeds, that the insurance policy proceeds shall
redound to the benefit of the estate of the insured.
 RTC : in favour of Masagana declaring the
replacement-renewal policies effective and
binding from 22 May 1992 until 22 May
1993.
UCPB GENERAL INSURANCE CO.
 UCPB appealed.
INC. vs. MASAGANA TELAMART, INC.
 CA disagreed with UCPB stand that
ACTION: MR on SC’s decision reversing CA and Masagana Inc.’s tender of payment of the
ordered UCPB to pay Masagana Inc as indemnity for premiums on 13 July 1992 did not result in
the burned properties covered by the renewal- the renewal of the policies, having been
replacement policies. made beyond the effective date of renewal
as provided under Policy Condition No. 26,
FACTS: which states:

 Masagana Inc. obtained from UCPB 26. Renewal Clause. -

Insurance five (5) insurance policies on its - Unless the company
properties. All five (5) policies reflect on at least forty five
their face the effectivity term: "from 4:00 days in advance of
P.M. of 22 May 1991 to 4:00 P.M. of 22 the end of the policy
May 1992." period mails or
 On June 13, 1992, Masagana properties in delivers to the
Pasay City were razed by fire. assured at the address
 On July 13, 1992, Masagana tendered, and shown in the policy
UCPB accepted, five (5) Equitable Bank notice of its intention
Manager's Checks as renewal premium not to renew the
payments for which Official Receipt Direct policy or to condition
Premium was issued by UCPB. its renewal upon
reduction of limits or
 elimination of
coverages, the
assured shall be
entitled to renew the
policy upon payment
of the premium due
on the effective date
of renewal.
 Both the Court of Appeals and the
trial court found that sufficient
proof exists that
- For years, Petitioner
had been issuing fire
policies to the
Respondent, and these
policies were annually
renewed.
- Petitioner had been granting
Respondent a 60- to 90-day credit
term within which to pay the
premiums on the renewed policies.
- There was no valid notice of non-
renewal of the policies in question,
as there is no proof at all that the
notice sent by ordinary mail was
received by Respondent, and the
copy thereof allegedly sent to
Zuellig was ever transmitted to
Respondent.
- The premiums for the policies in
question in the aggregate amount
of P225,753.95 were paid by
Respondent within the 60- to 90-
day credit term and were duly
accepted and received by
Petitioners cashier.
 SC first decision: The fire insurance
policies issued by petitioner to the
respondent had not been extended or
renewed by an implied credit
arrangement when actual payment of
premium was tendered on a later date
and after the occurrence of the (fire)
risk insured against.
 Hence, respondent filed the present
MR.
ISSUE: whether Section 77 of the Insurance
Code of 1978 (P.D. No. 1460) must be strictly
applied to Petitioners advantage despite its practice of
granting a 60- to 90-day credit term for the payment
of premiums.
HELD: NO.
Section 77 of the Insurance Code of 1978
provides:
SEC. 77. An insurer is entitled to payment of the
premium as soon as the thing insured is exposed to
the peril insured against. Notwithstanding any
agreement to the contrary, no policy or contract of
insurance issued by an insurance company is valid
and binding unless and until the premium thereof has
been paid, except in the case of a life or an industrial
life policy whenever the grace period provision
applies.
It can be seen at once that Section 77 does not
restate the portion of Section 72 expressly permitting
an agreement to extend the period to pay the
premium. But are there exceptions to Section 77?
The answer is in the affirmative.
5 exceptions to Sec. 77 of the Insurance Code
of 1978
1. In case of a life or industrial life policy,
whenever the grace period provision
applies. (Sec. 77, Insurance Code)
2. Any acknowledgment in a policy or
contract of insurance of the receipt of
premium is conclusive evidence of its
payment, so far as to make the policy
binding, notwithstanding any stipulation
therein that it shall not be binding until
premium is actually paid.( Sec. 78,
Insurance Code)
3. If the parties have agreed to the payment in
installments of the premium and partial
payment has been made at the time of loss.
(Makati Tuscany
Condominium Corporation vs. Court of
Appeals)
4. The insurer may grant credit extension for
the payment of the premium. This simply
means that if the insurer has granted the
insured a credit term for the payment of the
premium and loss occurs before the
expiration of the term, recovery on the
policy should be allowed even though the
premium is paid after the loss but within the
credit term.(ibid.)
 Moreover, there is nothing in Section 77
which prohibits the parties in an insurance
contract to provide a credit term within
which to pay the premiums. That agreement
is not against the law, morals, good
customs, public order or public policy. The
agreement binds the parties.
5. Estoppel.
In the instant case, it would be unjust and
inequitable if recovery on the policy would
not be permitted against Petitioner, which
had consistently granted a 60- to 90-day
credit term for the payment of premiums
despite its full awareness of Section
77. Estoppel bars it from taking refuge
under said Section, since Respondent relied
in good faith on such practice.
FORTUNE MEDICARE, INC., v. AMORIN
ACTION: This is a petition for review on
certiorari1 under Rule 45 of the Rules of Court, which
challenges the of CA.
FACTS:
 David Robert U. Amorin (Amorin) was a
cardholder/member of Fortune Medicare,
Inc. (Fortune Care), a corporation engaged
in providing health maintenance services to
its members.
 The terms of Amorin's medical coverage
were provided in a Corporate Health
Program Contract4 (Health Care Contract)
which was executed on January 6, 2000 by
Fortune Care and the House of
Representatives, where Amorin was a
permanent employee.
 While on vacation in Honolulu, Hawaii in
May 1999, Amorin underwent an emergency
surgery, specifically appendectomy, at the
St. Francis Medical Center, causing him to
incur professional and hospitalization
expenses of US$7,242.35 and US$1,777.79,
respectively.
 He attempted to recover from Fortune Care
the full amount thereof upon his return to
Manila, but the company merely approved a
reimbursement of ₱12,151.36, an amount
that was based on the average cost of
appendectomy, net of medicare deduction, if
the procedure were performed in an
accredited hospital in Metro Manila.5
 Amorin received under protest the approved
amount, but asked for its adjustment to
cover the total amount of professional fees
which he had paid, and eighty percent (80%)
of the approved standard charges based on
"American standard", considering that the
emergency procedure occurred in the U.S.A.
 Fortune Care denied Amorin’s request,
prompting the latter to file a complaint7 for
breach of contract with damages with the
Regional Trial Court (RTC) of Makati City.
 For its part, Fortune Care argued that the
Health Care Contract did not cover
hospitalization costs and professional fees
incurred in foreign countries, as the
contract’s operation was confined to
Philippine territory.8 Further, it argued that
its liability to Amorin was extinguished
upon the latter’s acceptance from the
company of the amount of ₱12,151.36.
 RTC: dismissed Amorin’s complaint. Citing
Section 3, Article V of the Health Care
Contract, the RTC explained: Taking the
contract as a whole, the Court is convinced
that the parties intended to use the Philippine
standard as basis. On the basis of the clause
providing for reimbursement equivalent to
80% of the professional fee which should
have been paid, had the member been
treated by an affiliated physician, the Court
concludes that the basis for reimbursement
shall be Philippine rates. That provision,
taken with Article V of the health program
contract, which identifies affiliated hospitals
as only those accredited clinics, hospitals
and medical centers located "nationwide"
only point to the Philippine standard as basis
for reimbursement. Dissatisfied, Amorin
appealed the RTC decision to the CA.
 CA: appeal granted. Reason: first, health
care agreements such as the subject Health
Care Contract, being like insurance
contracts, must be liberally construed in
favor of the subscriber. In case its provisions
are doubtful or reasonably susceptible of
two interpretations, the construction
conferring coverage is to be adopted and
exclusionary clauses of doubtful import
should be strictly construed against the
provider.14 Second, the CA explained that
there was nothing under Article V of the
Health Care Contract which provided that
the Philippine standard should be used even
 in the event of an emergency confinement in
a foreign territory.15
 Fortune Care’s MR was denied.
 Hence, the filing of the present petition for
review on certiorari.
ISSUE: Whether Fortune Care’s liability to Amorin
under the subject Health Care Contract should be
based on the expenses for hospital and professional
fees which he actually incurred, and should not be
limited by the amount that he would have incurred
had his emergency treatment been performed in an
accredited hospital in the Philippines
HELD: YES.
We emphasize that for purposes of determining the
liability of a health care provider to its members,
jurisprudence holds that a health care agreement is in
the nature of non-life insurance, which is primarily a
contract of indemnity. Once the member incurs
hospital, medical or any other expense arising from
sickness, injury or other stipulated contingent, the
health care provider must pay for the same to the
extent agreed upon under the contract.
It is an established rule in insurance contracts that
when their terms contain limitations on liability, they
should be construed strictly against the insurer. These
are contracts of adhesion the terms of which must be
interpreted and enforced stringently against the
insurer which prepared the contract. This doctrine is
equally applicable to health care agreements.
In the instant case, the extent of Fortune Care’s
liability to Amorin under the attendant circumstances
was governed by Section 3(B), Article V of the
subject Health Care Contract, considering that the
appendectomy which the member had to undergo
qualified as an emergency care, but the treatment was
performed at St. Francis Medical Center in Honolulu,
Hawaii, U.S.A., a non-accredited hospital. We restate
the pertinent portions of Section 3(B):
B. EMERGENCY CARE IN NON-ACCREDITED
HOSPITAL
1. Whether as an in-patient or out-patient,
FortuneCare shall reimburse the total hospitalization
cost including the professional fee (based on the total
approved charges) to a member who receives
emergency care in a non-accredited hospital. The
above coverage applies only to Emergency
confinement within Philippine Territory. However, if
the emergency confinement occurs in foreign
territory, Fortune Care will be obligated to reimburse
or pay eighty (80%) percent of the approved standard
charges which shall cover the hospitalization costs
and professional fees. x x x23 (Emphasis supplied)
The point of dispute now concerns the proper
interpretation of the phrase "approved standard
charges", which shall be the base for the allowable
80% benefit. The trial court ruled that the phrase
should be interpreted in light of the provisions of
Section 3(A), i.e., to the extent that may be allowed
for treatments performed by accredited physicians in
accredited hospitals. As the appellate court however
held, this must be interpreted in its literal sense,
guided by the rule that any ambiguity shall be strictly
construed against Fortune Care, and liberally in favor
of Amorin.
The Court agrees with the CA. As may be gleaned
from the Health Care Contract, the parties thereto
contemplated the possibility of emergency care in a
foreign country. As the contract recognized Fortune
Care’s liability for emergency treatments even in
foreign territories, it expressly limited its liability
only insofar as the percentage of hospitalization and
professional fees that must be paid or reimbursed was
concerned, pegged at a mere 80% of the approved
standard charges.
The word "standard" as used in the cited stipulation
was vague and ambiguous, as it could be susceptible
of different meanings. Plainly, the term "standard
charges" could be read as referring to the
"hospitalization costs and professional fees" which
were specifically cited as compensable even when
incurred in a foreign country. Contrary to Fortune
Care’s argument, from nowhere in the Health Care
Contract could it be reasonably deduced that these
"standard charges" referred to the "Philippine
standard", or that cost which would have been
incurred if the medical services were performed in an
accredited hospital situated in the Philippines.
For treatments in foreign territories, the only
qualification was only as to the percentage, or 80% of
that payable for treatments performed in non-
accredited hospital.
All told, in the absence of any qualifying word that
clearly limited Fortune Care's liability to costs that
are applicable in the Philippines, the amount payable
by Fortune Care should not be limited to the cost of
treatment in the Philippines, as to do so would result
in the clear disadvantage of its member. If, as Fortune
Care argued, the premium and other charges in the
Health Care Contract were merely computed on
assumption and risk under Philippine cost and, that
the American cost standard or any foreign country's
cost was never considered, such limitations should
have been distinctly specified and clearly reflected in
the extent of coverage which the company voluntarily
assumed.
Settled is the rule that ambiguities in a contract are
interpreted against the party that caused the
ambiguity. "Any ambiguity in a contract whose terms
are susceptible of different interpretations must be
read against the party who drafted it."
SUN INSURANCE OFFICE, LTD., v. CA
FACTS:
 Petitioner SUN INSURANCE OFFICE,
LTD issued Personal Accident Policy 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.
 Pilar Nalagon, Lim's secretary, was the only
eyewitness to his death. 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.
 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. The petitioner contends
that the insured willfully exposed himself to
needless peril and thus removed himself
from the coverage of the insurance policy.
 The widow sued the petitioner in the RTC
and was sustained. The petitioner was
sentenced to pay her P200,000.00,
representing the face value of the policy,
with interest at the legal rate plus damages.
 CA: affirmed RTC and the motion for
reconsideration was denied.
 The petitioner then came to this Court to
fault the CA for approving the payment of
the claim and the award of damages.
ISSUE: Whether Lim, Jr.’s death was by accident
HELD: YES.
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.
In-substance, 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.
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.
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 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.

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.