Landicho vs. GSIS[G.R. No. L-28866 March 17, 1972]FACTS:On June 1, 1964, the GSIS issued in favor of FlavianoLandicho,acivilengineeroftheBureauofPublicWorks,stationedatMamburao,MindoroOccidental,optional additional lifeinsurance policy No. OG-136107in thesum ofP7,900.xxxEH 403

INSURANCE LAW CASE DIGESTSBefore the issuance of said policy, Landicho had filedan application, by filing and signing a printed form ofthe GSIS on the basis of which the policy was issued.Paragraph 7of said application States:7.xxxIherebyagree asfollows:xxxc.ThatthisapplicationservesasaletterofauthoritytotheCollectingOfficer of our Office thru the GSIS todeductfrommysalarythemonthlypremiumintheamountofP33.36,beginningthemonthofMay,1964,and every month thereafter until noticeofitsdiscontinuanceshallhavebeenreceived from the System; .d. That the failure to deduct from mysalary the month premiums shall notmakethepolicylapse,however,thepremiumaccountshallbeconsideredas indebtedness which, I bind myself topay the System; .e.Thatmypolicyshallbemadeeffective on the first day of the monthnextfollowingthemonththefirstpremiumispaid;provided,thatitisnot more ninety (90) daysbefore orafterthedateofthemedicalexamination,wasconductedifrequired."While still an employee of the Bureau of Public Works,Mr. Landicho died in an airplane crash on June 29,1966. Mrs. Landicho, in her own behalf and that ofherco-plaintiffs and minor children, Rafael J. and MariaLourdesEugenia,filedwiththeGSISaclaimforP15,800, asthe double indemnity due under policy No.OG-136107. GSIS denied the claim, upon the groundthatthepolicyhadneverbeeninforcebecause,pursuanttosubdivision(e)oftheabove-quotedparagraph 7 of the application, the policy "shall be ...effective on the first day of the month next followingthe month the first premium is paid," and no premiumhad ever been paid on said policy. The Lower Courtdecided in favor of the petitioner. GSIS appealed to theSupreme Court.ISSUE:WON the insurance policy in question has ever been inforce, not a single premium having been paid thereon.RULING:Lower Court decision is sustained.(T)he language, of subdivisions (c), (d) and (e) issuchastocreateanambiguitythatshouldberesolvedagainstthepartyresponsibletherefor defendantGSIS, as the party who prepared and furnished theapplication form and in favor of the party misledthereby, the insuredemployee.Indeed, our Civil Code provides:The interpretation of obscure words orstipulations in a contract shall not favorthe party who caused the obscurity.2This is particularly true as regards insurance policies,in respect of which it is settled that the " "terms in aninsurance policy, which are ambiguous, equivocal, oruncertain...aretobeconstruedstrictlyand moststrongly against the insurer, and liberally in favor ofthe insuredso as to effect the dominant purpose ofindemnity or payment to the insured, especially wherea forfeiture is involved" (29 Am. Jur., 181), and thereason for this rule isthe "insured usually has no voicein the selection orarrangement of thewords employedand that the language of the contract is selected withgreatcareanddeliberationbyexpertsandlegaladvisers employed by, and acting exclusively in theinterestof, theinsurancecompany."(44 C.J.S., p.1174.)3.The equitable and ethical considerations justifying theforegoingview arebolsteredup bytwo (2)factors,namely:(a)Theaforementionedsubdivision(c)states"thatthis application serves as a letter of authority to theCollecting Officer of our Office" the Bureau of PublicWorks "thrutheGSIS to deduct from my salary themonthly premium in the amount of P33.36." No suchdeduction was made and, consequently, not eventhefirstpremium"paid"becausethecollectingofficer of the Bureau of Public Works wasnotadvisedby the GSIS to make it (the deduction) pursuant tosaid authority. Surely, this omission ofthe GSIS shouldnot inure to its benefit. .(b)TheGSIShadimpliedly inducedtheinsuredtobelieve that Policy No. OG-136107was in force, hehavingbeenpaidbytheGSISthedividendscorresponding to said policy. Had the insured had theslightestinklingthatthelatterwasnot,asyet,effective fornon-payment ofthefirstpremium, hewould have, in all probability, caused the same to beforthwith satisfied.WHEREFORE, the decision appealed from should be, itis hereby affirmed, with costs against the defendant-appellant, Government Service Insurance System. Itisso ordered. .I