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 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

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.

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.

• 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.