Philippine Health Care Providers vs. Commissioner of Internal Revenue, 600 SCRA 413

Philippine Health Care Providers vs. Commissioner of Internal Revenue, 600 SCRA 413

Contracts; Petitioner’s health care agreement is primarily a contract of indemnity; A health care agreement is in the nature of a non-life insurance policy.—Under the law, a contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. The event insured against must be designated in the contract and must either be unknown or contingent. Petitioner’s health care agreement is primarily a contract of indemnity. And in the recent case of Blue Cross Healthcare, Inc. v. Olivares, 544 SCRA 580 (2008), this Court ruled that a health care agreement is in the nature of a non-life insurance policy.

Its Health Care Agreement is not a contract for the provision of medical services.—Contrary to petitioner’s claim, its health care agreement is not a contract for the provision of medical services. Petitioner does not actually provide medical or hospital services but merely arranges for the same and pays for them up to the stipulated maximum amount of coverage. It is also incorrect to say that the health care agreement is not based on loss or damage because, under the said agreement, petitioner assumes the liability and indemnifies its member for hospital, medical and related expenses (such as professional fees of physicians). The term “loss or damage” is broad enough to cover the monetary expense or liability a member will incur in case of illness or injury.

Contracts between companies like petitioner and the beneficiaries under their plans are treated as insurance contracts.—Petitioner’s contention that it is a health maintenance organization and not an insurance company is irrelevant. Contracts between companies like petitioner and the beneficiaries under their plans are treated as insurance contracts.