G.R. No. L-12189; April 29, 1960
FRANCISCA GALLARDO, plaintiff-appellee, vs. HERMENEGILDA S. MORALES, defendant-appellant.

FACTS

A compromise agreement led to a decision by the Court of First Instance of Manila on February 3, 1956, sentencing defendant Hermenegilda S. Morales to pay plaintiff Francisca Gallardo the sum of P7,000.00. A writ of execution was issued, and on August 8, 1956, the Sheriff of Manila garnished P7,000.00 from the P30,000.00 due to the defendant from the Capital Insurance & Surety Co., Inc. This amount was payable to her as the beneficiary under a personal accident policy issued on her husband, Luis Morales, who died by assassination on August 26, 1950. The policy insured him “for injuries and/or death as a result of murder or assault or attempt thereat.” The defendant invoked Rule 39, section 12, subdivision (k) of the Rules of Court, which exempts from execution the proceeds of any life insurance if the annual premiums do not exceed five hundred pesos, and asked the sheriff to quash the garnishment. The sheriff denied the request. The defendant then filed a motion in court seeking to declare the P7,000.00 exempt and to lift the garnishment. The lower court denied this motion by an order dated October 18, 1956, prompting the defendant’s appeal. The lower court held the policy was an accident insurance, not a life insurance, citing distinctions such as the low annual premium (P15.00 for a P50,000.00 policy), the one-year term, and the fact that the insurer was authorized only for non-life insurance.

ISSUE

Whether a personal accident insurance policy that “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, and thus exempt from execution.

RULING

Yes. The Supreme Court reversed the lower court’s order and set aside the garnishment. The Court acknowledged the general distinction between life insurance and accident insurance. However, it ruled that when an accident insurance policy includes the risk of death, it may also be regarded as a life insurance for the purpose of the exemption rule. The Court cited authorities stating that “life insurance” in its broader sense includes accident insurance since life is insured under either contract, and that a policy providing for payment in case of accidental death is a “life insurance policy” to that extent. The exemption provision in the Rules of Court refers to “any life insurance,” which should be interpreted to include contracts that, while primarily indemnifying against accident risks, also insure against loss of life due to accidental or criminal causes like murder. Furthermore, exemption statutes or rules should be liberally construed to effect their beneficent purpose of enabling an individual to provide a fund for his family free from creditors’ claims. Therefore, the proceeds of the personal accident policy in question fall within the exemption.