Pan Malayan Insurance Corporation v CA (Insurance) wrongdoer to the extent that the insurer has been obligated to pay.

insurer has been obligated to pay. Payment by

the insurer to the assured operates as an equitable that the insurer has been
obligated to pay. Payment by the insurer to the assured operates as an equitable
G.R. No. 81026 April 3, 1990
or negligence of a third party. CANLUBANG is apparently of the same
PAN MALAYAN INSURANCE CORPORATION, petitioner, vs. COURT OF
understanding. Based on a police report assignment to the former of all remedies
APPEALS, ERLINDA FABIE AND
that the latter may have against the third party whose negligence or wrongful act
HER UNKNOWN DRIVER, respondents.
caused the loss. The right of subrogation is not dependent upon, nor does it grow
out of, any privity of contract or upon written assignment of claim. It accrues
FACTS:
simply upon payment of the insurance claim by the insurer.
On December 10, 1985, PANMALAY filed a complaint for damages with the RTC
The exceptions are:
of Makati against private respondents Erlinda Fabie and her driver. PANMALAY
(1) if the assured by his own act releases the wrongdoer or third party liable for
averred the following: that it insured a Mitsubishi Colt Lancer car with plate No.
the loss or damage, from liability, the insurer's right of subrogation is defeated
DDZ-431 and registered in the name of Canlubang Automotive Resources
(2) where the insurer pays the assured the value of the lost goods without
Corporation [CANLUBANG]; that on May 26, 1985, due to the "carelessness,
notifying the carrier who has in good faith settled the assured's claim for loss, the
recklessness, and imprudence" of the unknown driver of a pick-up with plate no.
settlement is binding on both the assured and the insurer, and the latter cannot
PCR-220, the insured car was hit and suffered damages in the amount of
bring an action against the carrier on his right of subrogation
P42,052.00; that PANMALAY defrayed the cost of repair of the insured car and,
(3) where the insurer pays the assured for a loss which is not a risk covered by
therefore, was subrogated to the rights of CANLUBANG against the driver of the
the policy, thereby effecting "voluntary payment", the former has no right of
pick-up and his employer, Erlinda Fabie; and that, despite repeated demands,
subrogation against the third party liable for the loss
defendants, failed and refused to pay the claim of PANMALAY. private
None of the exceptions are availing in the present case.
respondents filed a Motion to Dismiss alleging that PANMALAY had no cause of
Also, even if under the above circumstances PANMALAY could not be deemed
action against them. They argued that payment under the "own damage" clause
subrogated to the rights of its assured under Article 2207 of the Civil Code,
of the insurance policy precluded subrogation under Article 2207 of the Civil
PANMALAY would still have a cause of action against private respondents. In the
Code, since indemnification thereunder was made on the assumption that there
pertinent case of Sveriges Angfartygs Assurans Forening v. Qua Chee Gan, supra.,
was no wrongdoer or no third party at fault.
the Court ruled that the insurer who may have no rights of subrogation due to
"voluntary" payment may nevertheless recover from the third party responsible
DECISION OF LOWER COURTS:
for the damage to the insured property under Article 1236 of the Civil Code.
(1) Trial Court: dismissed for no cause of action PANMALAY's complaint for
WHEREFORE, in view of the foregoing, the present petition is GRANTED.
damages against private respondents Erlinda Fabie and her driver
Petitioner's complaint for damages against private respondents is hereby
(2) CA: affirmed trial court.
REINSTATED. Let the case be remanded to the lower court for trial on the
merits.
ISSUE:
Whether or not the insurer PANMALAY may institute an action to recover the Insurance Case Digest: De la Cruz v. Capital Ins. &
amount it had paid its assured in settlement of an insurance claim against private
respondents as the parties allegedly responsible for the damage caused to the Surety Co, Inc. (1966)
insured vehicle. G.R. No. L-21574 June 30, 1966
Lessons Applicable: Liability of Insurer for Suicide and Accidental
RULING:
Death (Insurance)
PANMALAY is correct.
Article 2207 of the Civil Code is founded on the well-settled principle of Laws Applicable:
subrogation. If the insured property is destroyed or damaged through the fault or FACTS:
negligence of a party other than the assured, then the insurer, upon payment to  Eduardo de la Cruz, employed as a mucker in the
the assured, will be subrogated to the rights of the assured to recover from the Itogon-Suyoc Mines, Inc. in Baguio, was the holder of
 an accident insurance policy "against death or disability
caused by accidental means"
 January 1, 1957: For the celebration of the New Year,
the Itogon-Suyoc Mines, Inc. sponsored a boxing
contest for general entertainment wherein Eduardo, a
non-professional boxer participated
 In the course of his bout with another non-professional
boxer of the same height, weight, and size, Eduardo
slipped and was hit by his opponent on the left part of
the back of the head, causing Eduardo to fall, with his
head hitting the rope of the ring
 He was brought to the Baguio General Hospital the
following day. He died due to hemorrhage,
intracranial.
 Simon de la Cruz, the father of the insured and who
was named beneficiary under the policy, thereupon
filed a claim with the insurance company
 The Capital Insurance and Surety co., inc denied
stating that the death caused by his participation in a
boxing contest was not accidental
 RTC: favored Simon
ISSUE: W/N the cause of death was accident
HELD:YES.
 Eduardo slipped, which was unintentional
 The terms "accident" and "accidental"
o as used in insurance contracts, have not
acquired any technical meaning and are
construed by the courts in their ordinary and
common acceptation
o happen by chance or fortuitously, without
intention and design, and which is unexpected,
unusual, and unforeseen
o event that takes place without one's foresight or
expectation
o event that proceeds from an unknown cause, or
is an unusual effect of a known cause and,
therefore, not expected
 where the death or injury is not the natural or probable
result of the insured's voluntary act, or if something
unforeseen occurs in the doing of the act which
produces the injury, the resulting death is within the
protection of policies insuring against death or injury
from accident
 while the participation of the insured in the boxing
contest is voluntary, the injury was sustained when he
slid, giving occasion to the infliction by his opponent of
the blow that threw him to the ropes of the ring is not
 The fact that boxing is attended with some risks of
external injuries does not make any injuries received in
the course of the game not accidental
 In boxing as in other equally physically rigorous sports,
such as basketball or baseball, death is not ordinarily
anticipated to result. If, therefore, it ever does, the
injury or death can only be accidental or produced by
some unforeseen happening or event as what occurred
in this case
 Furthermore, the policy involved herein specifically
excluded from its coverage —
(e) Death or disablement consequent upon the Insured
engaging in football, hunting, pigsticking,
steeplechasing, polo-playing, racing of any kind,
mountaineering, or motorcycling.
o Death or disablement resulting from engagement
in boxing contests was not declared outside of
the protection of the insurance contract
Sun v CA G.R. No. 89741 March 13, 1991
J. Paras
Facts:
Tan took from Sun Insurance a Php 300,000 policy to cover his electrical
store in Iloilo city. Tan’s request for an indemnity in 1983 was repeatedly
denied, firstly in 1984. He wrote for a reconsideration in the same year. This
was rejected in 1985, prompting him to file a civil case in the same year. The
insurance company filed a motion to dismiss due to prescription in 1987, but
this was denied. The company went to the court of appeals to petition the
same thing, but this was denied.
Issue:
1. WON the filing of a motion for reconsideration interrupts the twelve
months prescriptive period to contest the denial of the insurance claim.
2. WON the rejection of the claim shall be deemed final only if it contains
words to the effect that denial is final. (ie. the first letter in 1984)
3. When does the cause of action accrue?
Held:
1.No
2.No
3. At the time of the first rejection of the insurance company
Ratio:
1. The policy states in section 27.
Action or suit clause — If a claim be made and rejected and an action or suit
be not commenced either in the Insurance Commission or in any court of
competent jurisdiction within twelve (12) months from receipt of notice of
such rejection, or in case of arbitration taking place as provided herein,
within twelve (12) months after due notice of the award made by the
arbitrator or arbitrators or umpire, then the claim shall for all purposes be
deemed to have been abandoned and shall not thereafter be recoverable
hereunder.
Respondent Tan admitted that he received a copy of the letter of rejection
on April 2, 1984. Thus, the 12-month prescriptive period started to run from
the said date of April 2, 1984, under section 27.
2. It was clear in the letter.
Ang v. Fulton Fire Insurance Co.- The condition contained in an insurance
policy that claims must be presented within one year after rejection is not
merely a procedural requirement but an important matter essential to a
prompt settlement of claims against insurance companies as it demands that
insurance suits be brought by the insured while the evidence as to the origin
and cause of destruction have not yet disappeared.
Therefore, there was a necessity of bringing suits against the Insurer within
one year from the rejection of the claim. (1984) The contention of the
respondents that the one-year prescriptive period does not start to run until
the petition for reconsideration had been resolved by the insurer (1985),
runs counter to the doctrine.
The provision in the contract was pursuant to Sec. 63.
A condition, stipulation or agreement in any policy of insurance, limiting the
time for commencing an action thereunder to a period of less than one year
from the time when the cause of action accrues, is void.
3. Eagle star- The right of the insured to the payment of his loss accrues from
the happening of the loss. However, the cause of action in an insurance
contract does not accrue until the insured's claim is finally rejected by the
insurer. This is because before such final rejection there is no real necessity
for bringing suit.
The cause of action, then, started when the insurer denied his claim in the
first instance(1984). This rejection of a petition for reconsideration as
insisted by respondents wasn’t the beginning of the cause of action.
Ty v. Filipinas Compañia de Seguros - Insurance Policy
17 SCRA 364
Facts:
> Ty was employed as a mechanic operator by Braodway Cotton
Factory at Grace Park, Caloocan.
> In 1953, he took personal accident policies from 7 insurance
companies (6 defendants), on different dates, effective for 12 mos.
> On Dec. 24. 1953, a fire broke out in the factory were Ty was
working. A hevy object fell on his hand when he was trying to put out
the fire.
> From Dec. 1953 to Feb. 6, 1954 Ty received treatment at the Nat’l
Orthopedic Hospital for six listed injuries. The attending surgeon
certified that these injuries would cause the temporary total disability of
Ty’s left hand.
> Insurance companies refused to pay Ty’s claim for compensation
under the policies by reason of said disability of his left hand. Ty filed
a complaint in the municipal court who decided in his favor.
> CFI reversed on the ground that under the uniform terms of the
policies, partial disability due to loss of either hand of the insured, to be
compensable must be the result of amputation.
Issue:
Whether or not Ty should be indemnified under his accident policies.
Held.
NO.
SC already ruled in the case of Ty v. FNSI that were the insurance
policies define partial disability as loss of either hand by amputation
through the bones of the wrist, the insured cannot recover under said
policies for temporary disability of his left hand caused by the fractures
of some fingers. The provision is clear enough to inform the party
entering into that contract that the loss to be considered a disability
entitled to indemnity, must be severance or amputation of the affected
member of the body of the insured.
VIRGINIA CALANOC v. CA, GR No. L-8151, 1955-12-16
Facts:
This suit involves the collection of P2,000 representing the value of a
supplemental policy covering accidental death which was secured by
one Melencio Basilio from the Philippine American Life Insurance
Company.
Melencio Basilio was a watchman of the Manila Auto Supply located at
the corner of Avenida Rizal and Zurbaran. He secured a life insurance
policy from the Philippine American Life Insurance Company in the
amount of P2,000 to which was attached a supplementary contract...
covering death by accident.
On January 25, 1951, he died of a gunshot wound on the occasion of a
robbery committed in the house of Atty. Ojeda at the corner of
Oroquieta and Zurbaran streets.
Virginia Calanoc, the widow, was paid the sum of P2,000, face value of
the policy, but... when she demanded the payment of the additional sum
of P2,000 representing the value of the supplemental policy, the
company refused alleging, as main defense, that the deceased died
because he was murdered by a person who took part in the commission
of the robbery and while... making an arrest as an officer of the law
which contingencies were expressly excluded in the contract and have
the effect of exempting the company from liability.
It is contended in behalf of the company that Basilio was killed which
"making an arrest as an officer of the law" or as a result of an "assault
or murder" committed in the place and therefore his death waa caused
by one of the risks excluded by the supplementary contract... which
exempts the company from liability.
Court of Appeals:
The death, therefore, of Basilio, although .unexpected, was not caused
by an accident, being a voluntary and intentional act on the part of the
one who robbed, or one of those who robbed, the house of Atty. Ojeda.
Hence, it is our considered opinibn ^hat the death... of Basilio, though
unexpected, cannot be considered accidental, for his death occurred
because he left his post and joined policeman Magsanoe .and Atty.
Ojeda to repair to the latter's residence to see what happened thereat.
Issues:
WON the insured's...... death waa caused by one of the risks
excluded by the supplementary contract... which exempts the company
from liability
Ruling:
We dissent from the above findings of the Court of Appeals.
Much less can it be pretended that Basilio died in the course.of an
assault or murder considering the very nature of these crimes.
there is no proof that the death of Basilio is the result of either crime for
the record is barren of any circumstance... showing how the fatal shot
was fired.
Nor can it be said that the killing was intentional... for there is the
possibility that the malefactor had fired the shot merely to scare away
the people around for his own protection and not necessarily to kill or
hit the victim.
while the act may not exempt the triggerman from liability for the
damage done, the fact... remains that the happening was a pure accident
on the part of the victim.
We are therefore persuaded to conclude that the circumstances unfolded
in the present case do not warrant the finding that the death of the
unfortunate victim comes within the purview of the exception clause of
the supplementary policy and, hence, do not exempt the company...
from liability.
EMILIA T. BIAGTAN v. INSULAR LIFE ASSURANCE
COMPANY, GR No. L-25579, 1972-03-29
Facts:
Juan S. Biagtan was insured with defendant Insular Life Assurance
Company under Policy No. 398075 for the sum of P5,000.00 and, under
a supplementary contract denominated "Accidental Death Benefit
Clause, for an additional sum of P5,000.00 if "the... death of the Insured
resulted directly from bodily injury effected solely through external and
violent means sustained in an accident * * * and independently of all
other causes." The clause, however, expressly provided that it would
not apply where death resulted from an injury
"intentionally inflicted by a third party."
On the night of May 20, 1964 or during the first hours of the following
day a band of robbers entered the house of the insured Juan S. Biagtan.
that in committing the robbery, the robbers, on, reaching the staircase
landing of the second floor, rushed towards the doors of the second
floor room, where they suddenly met a person near the door of one of
the... rooms who turned out to be the insured Juan S. Biagtan who
received thrusts from their sharp-pointed instruments, causing wounds
on the body of said Juan S. Biagtan resulting in his death at about 7
a.m. on the same day, May 21, 1964
Plaintiffs, as beneficiaries of the insured, filed a claim under the policy.
The insurance company paid the basic amount of P5,000.00 but refused
to pay the additional sum of P5,000.00 under the accidental death
benefit clause, on the ground that the insured's death... resulted from
injuries intentionally inflicted by third parties and therefore was not
covered.
Plaintiffs filed suit to recover, and after due hearing the court a quo
rendered judgment in their favor.
Issues:
whether under the facts as stipulated and found by the trial court the
wounds received by the insured at the hands of the robbers nine in all,
five of them mortal and four non-mortal were inflicted intentionally.
Ruling:
The case of Calanoc vs. Court of Appeals, 98 Phil. 79, is relied upon by
the trial court in support of its decision. The facts in that case,
however, are different from those obtaining here.
For while a single shot fired from a distance, and by a person who was
not even seen... aiming at the victim, could indeed have been fired
without intent to kill or injure, nine wounds inflicted with bladed
weapons at close range cannot conceivably be considered as innocent
insofar as such intent is concerned. The manner of execution of the
crime permits no... other conclusion.
Thus, it has been held that "intentional" as used in an accident policy
excepting... intentional injuries inflicted by the insured or any other
person, etc., implies the exercise of the reasoning faculties,
consciousness, and volition.[1] Where a provision of the policy
excludes intentional injury, it is the intention of the person... inflicting
the injury that is controlling.[2] If the injuries suffered by the insured
clearly resulted from the intentional act of a third person the insular is
relieved from liability as stipulated.
DISSENT, Teehankee:
1. The case of Calanoc cited by the lower court is indeed
controlling here.
the burden of proving that the killing was intentional so as to have it
fall within the stipulated exception of having resulted from injuries
"intentionally inflicted by a third part"... must' be discharged by the
insurance company.
in such cases where the killing does not amount to murder, it must be
held to be a "pure accident" on the part of the victim, compensable with
double-indemnity, even though the malefactor is... criminally liable for
his act.
Defendant company patently failed to discharge its burden of proving
that the fatal injuries were inflicted upon the deceased intentionally, i.e.
deliberately.
It has long been an established rule of construction of so-called
contracts of adhesion such as insurance contracts, where the insured is
handed a printed insurance policy whose fine-print language has long
been selected with great care and deliberation by specialists and... legal
advisers employed by and acting exclusively in the interest of the
insurance company, that the terms and phraseology of the policy,
particularly of any exception clauses, must be clearly expressed so as to
be easily understood by the insured and any "ambiguous, equivocal... or
uncertain terms" are to be "construed strictly and most strongly against
the insurer and liberally in favor of the insured so as to effect the
dominant purpose indemnity or payment to the insured, especially
where a forfeiture is involved."
FINALLY , the untenability of herein defendant insurer's claim that the
insured's death fell within the exception is further heightened by the
stipulated fact that two other insurance companies which likewise
covered the insured for much larger sums under... similar accidental
death benefit clauses promptly paid the benefits thereof to plaintiffs-
beneficiaries.
FINMAN GENERAL ASSURANCE CORPORATION v. CA, GR No.
100970, 1992-09-02
Facts:
October 22, 1986, deceased Carlie Surposa was insured with petitioner
Finman General Assurance Corporation under Finman General
Teachers Protection Plan Master Policy No. 2005 and Individual Policy
No. 08924 with his parents, spouses
Julia and Carlos Surposa and brothers Christopher, Charles, Chester
and Clifton, all surnamed Surposa, as beneficiaries.
While said insurance policy was in full force and effect, the insured
Carlie Surposa, died on October 18, 1988 as a result of a stab wound
inflicted by one of the three (3) unidentified men without provocation
and warning on the part of the former as... he and his cousin, Winston
Surposa, were waiting for a ride on their way home along Rizal-Locsin
Streets, Bacolod City after attending the celebration of the "Maskarra
Annual Festival."... private respondent and the other beneficiaries of
said insurance policy filed a written notice of claim with the petitioner
insurance company which denied said claim contending that murder
and assault are not within the scope of the coverage of the insurance...
policy.
Insurance Commission ruled in favor of
insured/beneficiaries
On February 24, 1989, private respondent filed a complaint with the
Insurance Commission
"In the light of the foregoing, we find respondent liable to pay
complainant the sum of P15,000.00 representing the proceeds of the
policy with interest. As no evidence was submitted to prove the claim
for mortuary aid in the sum of P1,000.00, the same... cannot be
entertained.
On July 11, 1991, the appellate court affirmed said decision.
petitioner filed this petition alleging grave abuse of discretion on the
part of the appellate court in applying the principle of "expresso unius
exclusion alterius" in a personal accident insurance policy... since death
resulting from murder and/or assault are impliedly excluded in said
insurance policy considering that the cause of death of the insured was
not accidental but rather a deliberate and intentional act of the assailant
in killing the former as indicated by the location... of the lone stab
wound on the insured.
Therefore, said death was committed with deliberate intent which, by
the very nature of a personal accident insurance policy, cannot be
indemnified.
Issues:
WON the death of the insured was committed...... with
deliberate intent which, by the very nature of a personal accident
insurance policy, cannot be indemnified
Ruling:
We do not agree.
In the case at bar, it cannot, be pretended that Carlie Surposa died in the
course of an assault or murder as a result of his voluntary act
considering the very nature of these crimes.
the personal accident insurance policy, involved herein specifically
enumerated only ten (10) circumstances wherein no liability attaches to
petitioner insurance company for any injury, disability or loss suffered
by the insured as a result of any of the... stipulated causes. The principle
of "expresso unius exclusio alterius" -- the mention of one thing implies
the exclusion of another thing -- is therefore applicable in the instant
case since murder and assault, not having been expressly included in
the enumeration of the... circumstances that would negate liability in
said insurance policy cannot be considered by implication to discharge
the petitioner insurance company from liability for any injury, disability
Or loss suffered by the insured.
Thus, the failure of the petitioner insurance company... to include death
resulting from murder or assault among the prohibited risks leads
inevitably to the conclusion that it did not intend to limit or exempt
itself from liability for such death.
Principles:
The terms 'accident' and 'accidental', as used in insurance contracts have
not acquired any technical meaning, and are construed by the courts in
their ordinary and common acceptation. Thus, the terms have been
taken to mean that which happen by chance or... fortuitously, without
intention and design, and which is unexpected, unusual, and
unforeseen. 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 cause and, therefore,... not
expected."
The generally accepted rule is that, death or injury does not result from
accident or accidental means within the terms of an accident-policy if it
is the natural result of the insured's voluntary act, unaccompanied by
anything unforeseen except the death or... injury.
Fortune v CA G.R. No. 115278 May 23, 1995
J. Davide Jr.
Facts:
Producers Bank’s money was stolen while it was being transported from
Pasay to Makati. The people guarding the money were charged with the
theft. The bank filed a claim for the amount of Php 725,000, and such was
refused by the insurance corporation due to the stipulation:
GENERAL EXCEPTIONS
The company shall not be liable under this policy in report of
(b) any loss caused by any dishonest, fraudulent or criminal act of the insured
or any officer, employee, partner, director, trustee or authorized
representative of the Insured whether acting alone or in conjunction with
others. . . .
In the trial court, the bank claimed that the suspects were not any of the
above mentioned. They won the case. The appellate court affirmed on the
basis that the bank had no power to hire or dismiss the guard and could only
ask for replacements from the security agency.
Issue: Did the guards fall under the general exceptions clause of the
insurance policy and thus absolved the insurance company from liability?
Held: Yes to both. Petition granted.
Ratio:
The insurance agency contended that the guards automatically became the
authorized representatives of the bank when they cited International
Timber Corp. vs. NLRC where a contractor is a "labor-only" contractor in the
sense that there is an employer-employee relationship between the owner
of the project and the employees of the "labor-only" contractor.
They cited Art. 106. Of the Labor Code which said:
Contractor or subcontractor. — There is "labor-only" contracting where the
person supplying workers to an employer does not have substantial capital
or investment in the form of tools, equipment, machineries, work premises,
among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by
him.
The bank asserted that the guards were not its employees since it had
nothing to do with their selection and engagement, the payment of their
wages, their dismissal, and the control of their conduct.
They cited a case where an employee-employer relationship was governed
by (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct.
The case was governed by Article 174 of the Insurance Code where it stated
that casualty insurance awarded an amount to loss cause by accident or
mishap.
“The term "employee," should be read as a person who qualifies as such as
generally and universally understood, or jurisprudentially established in the
light of the four standards in the determination of the employer-employee
relationship, or as statutorily declared even in a limited sense as in the case
of Article 106 of the Labor Code which considers the employees under a
"labor-only" contract as employees of the party employing them and not of
the party who supplied them to the employer.”
But even if the contracts were not labor-only, the bank entrusted the
suspects with the duty to safely transfer the money to its head office, thus,
they were representatives. According to the court, “a ‘representative’ is
defined as one who represents or stands in the place of another; one who
represents others or another in a special capacity, as an agent, and is
interchangeable with ‘agent.’”
Misamis v Capital Insurance GR L-21380 May 20, 1966
En Banc
Facts:
Misamis Lumber Company insured its Ford Falcon to Capital Insurance for P
14,000. One day, the car’s crank and flywheel broke when it passed over a
water hole in Aurora Boulevard. Misamis sent it to be repaired at the cost of
302 pesos. However, Capital did not want to pay the entire amount because
the repair limit in the contract stipulated up to 150 pesos only. Misamis filed
suit.
The lower court ruled against the insurance corporation because the
company did not show that the cost was excessive. Also , the court ruled that
absolving the company of the excess amount would make the contract one
sided.
Issue: Is the insurance company liable for more than the amount in the repair
limit?
Held: No. Insurance company only ordered to pay 150 pesos.
Ratio:
Paragraph 4, subpar a. of the insurance contract is clear and specific. It
authorizes up to 150 pesos only as a repair limit.
The lower court did not heed the express stipulation in the agreement. The
policy specifically noted the mechanics for repair in par. 2 and the limits of
the liability in par 4. The company didn’t notify the insurance provider before
it did the repairs. Also, even if the contract is onerous, this doesn’t justify its
abrogation.
Villacorta v. Insurance Commission
G.R. No. L-54171, 28 October 1980, 100 SCRA 467
FACTS:
Villacorta had her Colt Lancer car insured with Empire Insurance
Company against own damage, theft and 3rdparty liability. While the car
was in the repair shop, one of the employees of the said repair shop took
it out for a joyride after which it figured in a vehicular accident. This
resulted to the death of the driver and some of the passengers as well as
to extensive damage to the car. Villacorta filed a claim for total loss with
the said insurance company. However, it denied the claim on the ground
that the accident did not fall within the provisions of the policy either for
the Own Damage or Theft coverage, invoking the policy provision on
“Authorized Driver Clause”. This was upheld by the Insurance
Commission further stating that the car was not stolen and therefore not
covered by the Theft Clause because it is not evident that the person who
took the car for a joyride intends to permanently deprive the insured of
his/ her car.
ISSUE:
Whether or not the insurer company should pay the said claim.
HELD:
Yes. Where the insured’s car is wrongfully taken without the insured’s
consent from the car service and repair shop to whom it had been
entrusted for check-up and repairs (assuming that such taking was for a
joy ride, in the course of which it was totally smashed in an accident),
respondent insurer is liable and must pay insured for the total loss of the
insured vehicle under the Theft Clause of the policy.
Assuming, despite the totally inadequate evidence, that the taking was
“temporary” and for a “joy ride”, the Court sustains as the better view
that which holds that when a person, either with the object of going to a
certain place, or learning how to drive, or enjoying a free ride, takes
possession of a vehicle belonging to another, without the consent of its
owner, he is guilty of theft because by taking possession of the personal
property belonging to another and using it, his intent to gain is evident
since he derives therefrom utility, satisfaction, enjoyment and pleasure.
ACCORDINGLY, the appealed decision is set aside and judgment is
hereby rendered sentencing private respondent to pay petitioner the sum
of P35,000.00 with legal interest from the filing of the complaint until
full payment is made and to pay the costs of suit.
Perla Cia. De Seguros, Inc. v. CA
on 7:00 AM in Case Digests, Commercial Law
2 owner’s consent or knowledge, such taking constitutes theft, and therefore,
208 SCRA 487 (1992)
 INSURANCE LAW: Warranties
 Authorized Driver Clause applies only in accidents, etc. but not to
theft
FACTS:
Spouses Lim purchased a brand new red Ford Laser car from Supercars, Inc.
in a sale by installment secured by a chattel mortgage. The same car is
insured with Perla Compania de Seguros (Perla). On the same day, Supercars,
Inc. assigned its rights, title and interest to FCP Credit Corporation (FCP).
On a later date, the vehicle was carnapped. Spouses Lim filed a claim for loss
with Perla but this was denied on the ground that Evelyn Lim, who was using
the vehicle before it was carnapped, was in possession of an expired driver’s
license at the time of the loss, in violation of the authorized driver clause of
the insurance policy.
ISSUE:
 Whether or not Perla is liable despite the alleged violation of the
authorized driver clause in the insurance contract
HELD:
The Supreme Court held that Perla is liable to pay the insurance claim.
The comprehensive motor car insurance policy issued by Perla covered loss
or damage to the car: (a) xxx; (b) by fire, external explosion, self-ignition or
lightning or burglary, housebreaking or theft; (c) xxx.
Where a car is admittedly unlawfully and wrongfully taken without the
it is the “THEFT” clause, and not the “AUTHORIZED DRIVER” clause that
should apply.
The Court of Appeals was correct in holding that:
“…Theft is an entirely different legal concept from that of accident. Theft is
committed by a person with the intent to gain or, to put it in another way,
with the concurrence of the doer’s will. On the other hand, accident,
although it may proceed or result from negligence, is the happening of an
event without the concurrence of the will of the person by whose agency it
was caused. (Bouvier’s Law Dictionary).
Clearly, the risk against accident is distinct from the risk against theft. The
“authorized driver clause” in a typical insurance policy is in contemplation or
anticipation of accident in the legal sense in which it should be understood,
and not in contemplation or anticipation of an event such as theft. The
distinction – often seized upon by insurance companies in resisting claims
from their assureds – between death occurring as a result of accident and
death occurring as a result of intent may, by analogy, apply to the case at
bar. Thus, if the insured vehicle had figured in an accident at the time she
drove it with an expired license, then, appellee Perla Compania could
properly resist appellant’s claim for indemnification for the loss or
destruction of the vehicle resulting from the accident. But in the present
case, the loss of the insured vehicle did not result from an accident where
intent was involved; the loss in the present case was caused by theft, the
commission of which was attended by intent.”
There is no causal connection between the possession of a valid driver’s
license and the loss of a vehicle. To rule otherwise would render car
insurance practically a sham since an insurance company can easily escape
liability by citing restrictions which are not applicable or germane to the
claim, thereby reducing indemnity to a shadow.
Association of Baptists for World Evangelism, Inc. v.
Fieldmen’s Insurance Co., Inc.
Petitioner: Association of Baptists for World Evangelism, Inc.
Respondent: Fieldmen’s Insurance Co., Inc.
Facts:
Association of Baptists for World Evangelism, Inc., a domestic religious corporation, had
an insurable interest in a Chevrolet Carry-all which was insured with the Fieldmen’s
Insurance Co., Inc under its Private Car Comprehensive Policy. Dr. Antonio Lim, the
representative of the association, placed the Chevrolet at the Jones Monument Mobilgas
Service Station at Davao City for it to be displayed as being for sale. The Chevrolet was
under the care of the station’s operator Rene Te. Romeo Catiben, one of the boys at the
Jones Monument Mobilgas Service Station, and a nephew of the wife of Rene Te, took
the Chevrolet for a joy ride to Toril, Davao City without the prior permission of Lim or Te
and on its way back to Davao City, the Chevrolet, due to some mechanical defect,
accidentally bumped an electric post causing actual damages. The trial court ordered
the insurance company to pay the association P5000 as indemnity for the damage
sustained by the vehicle. Dissatisfied, the insurance company filed an appeal to the
appellate court.
Issue:
Whether there must be prior criminal conviction of Romeo Catiben for theft for the
damage to the Chevrolet to be compensable under the Fieldman’s Private Car
Comprehensive Policy
Held:
Prior conviction of Catiben is not necessary. The insurance company is liable to pay the
association.
Rationale:
The comprehensive policy issued by the insurance company includes loss of or damage
to the motor vehicle by burglary or theft. It is settled that the act of Catiben in taking the
vehicle for a joy ride to Toril, Davao City, constitutes theft within the meaning of the
insurance policy and that recovery for damage to the car is not barred by the illegal use
of the car by one of the station boys. There need be no prior conviction for the crime of
theft to make an insurer liable under the theft clause of the policy. Upon the facts
stipulated by the parties it is admitted that Catiben had taken the vehicle for a joy ride
and while the same was in his possession he bumped it against an electric post resulting
in damages. The act is theft within a policy of insurance. In a civil action for recovery on
an automobile insurance, the question whether a person using a certain automobile at
the time of the accident stole it or not is to be determined by a fair preponderance of
evidence and not by the rule of criminal law requiring proof of guilt beyond reasonable
doubt. Besides, there is no provision in the policy requiring prior criminal conviction for
theft.
Sherman Shaper v. Hon. Judge RTC of Olongapo City
GR. No. 78848, 14 November 1988, 167 SCRA 368
FACTS:
Petitioner Sherman Shafer obtained a private car policy over his Ford
Laser car from Makati Insurance Company, Inc., for third party liability
(TPL). During the effectivity of the policy, an information for reckless
imprudence resulting in damage to property and serious physical injuries
was filed against petitioner. The owner of the damaged Volkswagen car
filed a separate civil action against petitioner for damages. The court a
quo issued an order dismissing the third party complaint on the ground
that it was premature, based on the premise that unless the accused
(herein petitioner) is found guilty and sentenced to pay the offended party
indemnity or damages, the third party complaint is without cause of
action. The court further stated that the better procedure is for the accused
(petitioner) to wait for the outcome of the criminal aspect of the case to
determine whether or not the accused, also the third party plaintiff, has a
cause of action against the third party defendant for the enforcement of
its third party liability (TPL) under the insurance contract.
ISSUE:
Whether or not the accused in a criminal action for reckless imprudence,
where the civil action is jointly prosecuted, can legally implead the
insurance company as third party defendant under its private car
insurance policy.
RULING:
YES. In the instant case, the court a quo erred in dismissing petitioner’s
third party complaint on the ground that petitioner had no cause of action
yet against the insurance company (third party defendant). There is no
need on the part of the insured to wait for the decision of the trial court
finding him guilty of reckless imprudence. The occurrence of the injury
to the third party immediately gave rise to the liability of the Insure under
its policy.
A third party complaint is a device allowed by the rules of procedure by
which the defendant can bring into the original suit a party against whom
he will have a claim for indemnity or remuneration as a result of a
liability established against him in the original suit. Third party
complaints are allowed to minimize the number of lawsuits and avoid the
necessity of bringing two (2) or more actions involving the same subject
matter. They are predicated on the need for expediency and the avoidance
of unnecessary lawsuits. If it appears probable that a second action will
result if the plaintiff prevails, and that this result can be avoided by
allowing the third party complaint to remain, then the motion to dismiss
the third party complaint should be denied.
Guingon v. Del Monte
80 SCRA 181
Facts:
> The insured owned a fleet of jeepneys. He insured the operation of
his jeepneys against “accidents with third part liability” with Capital
Insurance and Surety Co.
> One day, one of his jeepney dirivers, bumped and killed Guingon.
> An action for damages was then filed against the owner-insured, the
driver and the company.
> The company sough to dismiss the charges against it on the ground
of lack of cause of action against it.
Issue:
Whether or not there is a cause of action against the company.
Held:
YES.
The right of a person injured to sue the insurer of the party at fault
depends on whether the contract of insurance was intended to benefit
third persons. The test applied here is: Where the contract provides for
indemnity against liability to third persons, then third persons to whom
the insured is liable, can sue the insurer. On the other hand, where the
contract is for indemnity against actual loss or payment, then third
persons cannot proceed against the insurer, the contract being solely to
reimburse the insured for liability actually discharged by him through
payment to third persons, said third persons' recourse being thus limited
to the insured alone
The policy in the present case, is one whereby the insurer agreed to
indemnify the insured "against all sums . which the Insured shall
become legally liable to pay in respect of: a. death of or bodily injury to
any person . . ." Clearly, therefore, it is one for indemnity against
liability from the fact then that the insured is liable to the third person,
such third person is entitled to sue the insurer.
Since the policy in questioned contained a stipulation pour autrui, then
the insurance company must deliver the proceeds to the claimants.
MALAYAN INSURANCE CO., INC., petitioner, vs. THE HON. COURT
OF APPEALS (THIRD DIVISION) MARTIN C. VALLEJOS, SIO CHOY,
SAN LEON RICE MILL, INC. and PANGASINAN TRANSPORTATION
CO., INC., respondents.
[G.R. No. L-36413 September 26, 1988 PADILLA, J.:]
TOPIC: Casualty Insurance
FACTS:
1. Petitioner Malayan Insurance Co. Inc. issued a Private Car
Comprehensive Policy in favor of respondent Sio Choy covering a
Willys jeep.
a. The insurance coverage was for "own damage" not to
exceed P600.00 and "third-party liability" in the amount
of P20,000.00.
2. 19 December 1967: the insured jeep collided with a passenger
bus
a. Insured jeep was driven by Juan P. Campollo an
employee of the respondent San Leon Rice Mill, Inc.,
b. Passenger bus belongs to the respondent Pangasinan
Transportation Co., Inc. (PANTRANCO)
c. Collision happened at the national highway in Pangasinan
d. Damage was caused to the insured vehicle and injuries to
the driver, Juan P. Campollo, and the respondent Martin
C. Vallejos, who was riding in the ill-fated jeep.
3. Vallejos filed an action for damages against Sio Choy, Malayan
Insurance Co, Inc and Pantranco before the CFI of Pangasinan
a. Vallejos prayed that defendants be ordered to pay him
jointly and severally
b. PANTRANCO claimed that the jeep of Sio Choy was
then operated at an excessive speed and bumped the
PANTRANCO bus which had moved to, and stopped at,
the shoulder of the highway in order to avoid the jeep
i. It also claimed that it had observed the diligence of
a good father of a family to prevent damage,
especially in the selection and supervision of its
employees and in the maintenance of its motor
vehicles.
ii. It prayed that it be absolved from any and all
liability.
c. Defendants Sio Choy and the petitioner insurance
company claimed that the fault in the accident was solely
imputable to the PANTRANCO
4. Sio Choy then filed a separate answer with a cross-claim against
Malayan Insurance Co, Inc. alleging that he had actually paid
Vallejos the amount of P5,000.00 for hospitalization and other
expenses
a. he prayed for the reimbursement by the insurance
company for the amount he may be ordered to pay
pursuant to the Private Car Comprehensive Policy
enforced during the accident
5. Malayan Insurance filed a third-party complaint against the San
Leon Rice Mill, Inc. for the reason that the person driving the
jeep of Sio Choy, at the time of the accident, was an employee
of the San Leon Rice Mill, Inc. performing his duties within the
scope of his assigned task, and not an employee of Sio Choy thus
San Leon should be held liable for the acts of its employee
6. CFI’s RULING: favored Vallejos and ordered Sio Choy, Malayan
Insurance Co., Inc., and third-party defendant San Leon Rice Mill,
Inc to pay jointly and severally liable.
7. CA affirmed CFI’s decision.
a. It ruled, however, that the San Leon Rice Mill, Inc. has
no obligation to indemnify or reimburse the petitioner
insurance company for whatever amount it has been
ordered to pay on its policy, since the San Leon Rice
Mill, Inc. is not a privy to the contract of insurance
between Sio Choy and the insurance company
ISSUE:
1. W/N Malayan Insurance Co Inc is solidarily liable to pay Vallejos the
ordered amount. No.
2. W/N San Leon Rice Mill has the obligation to indemnify or reimburse
Malayan Insurcance Co., Inc. for the amount the latter has been ordered
to pay. Yes
HELD:
1. NO. Only respondents Sio Choy and San Leon Rice Mill, Inc, (to
the exclusion of the petitioner) that are solidarily liable to
respondent Vallejos for the damages awarded to Vallejos.
a. Sio Choy and San Leon Rice Mill, Inc. are the principal
tortfeasors who are primarily liable to respondent
Vallejos. The law states that the responsibility of two
or more persons who are liable for a quasi-delict is
solidarily.
i. Sio Choy is liable as the owner of the ill-fated
Willys jeep under Art. 2184 of the Civil Code.
ii. San Leon Rice Mill Inc. is liable being the employer
of the driver of the Willys jeep at the time of the
motor vehicle mishap under Art. 2180 of the Civil
Code.
b. Malayan’s basis of liability is its insurance contract with
respondent Sio Choy.
i. If he is ordered to pay only up to the extent of what
the insurance contract provides which is P20,000
under the “third-party liability”
c. The liability of the insurer is based on contract; that of
the insured is based on tort
i. the direct liability of the insurer under indemnity
contracts against third party liability does not mean
 that the insurer can be held solidarily liable with the The lower court rendered a decision finding that Destrajo had not
insured and/or the other parties found at fault. exercised extraordinary diligence as the operator of the jeepney and
ii. In the present case: Malayan as insurer of Sio ordered him to pay for the damages. The second paragraph of the
Choy is liable to Vallejos but it cannot be made a
solidarily liable with the 2 principal tortfeasor for it
decision also ordered AFISCO to reimburse Destrajo whatever amounts
will result in a violation of the principles the latter shall have paid only up to the extent of its insurance coverage,
underlying solidary obligation and insurance signifying only secondary liability. The heirs however, filed a motion for
contracts. reconsideration with respect to the said second paragraph arguing that
1. Solidary obligation: the creditor may AFISCO should not merely be held secondarily liable because the
enforce the entire obligation against one of Insurance Code providesthat the insurer’s liability is “direct and primary
the solidary debtors and/or jointly and severally with theoperator of the vehicle”, although
2. Insurance Contract: a contract whereby
one undertakes for a consideration to
only up to the extent of the insurance coverage.
indemnify another against loss, damage, or ISSUE:
liability arising from an unknown or Whether or not AFISCO’s liability is direct and primary and/or solidary
contingent event with Destrajo.
iii. In this case the TC held Malayan as solidary liable HELD:
but qualified that only up to P20,000.00 Although the insurance policy clearly provides that AFISCO can be held
1. This ruling is a breach of the concept of directly liable by petitioners on the basis of the insurance contract,
a solidary obligation
2. Yes, Malayan upon paying Vallejos the amount exceeding
nonetheless, AFISCO may not be held solidarily liable with Destrajo
P20,000 shall become the subrogee of the insured, Sio Choy; since their respective liabilities are based on different grounds. The
as such, it is subrogated to whatever rights the latter has liability of the insurer is based on contract; that of the insured is based
against respondent San Leon Rice Mill,Inc. on tort. As such, petitioners have the option either to claim from AFISCO
Figuracion Vda. De Maglana v. Hon. Francisco to the extent agreed upon in the contract and the balance from Destrajo
or enforce the entire judgment from Destrajo subject to reimbursement
Consolacion from AFISCO to the extent of the insurance coverage.
G.R. No. 60506, 6 August 1992, 212 SCRA 268
FACTS:
Lope Maglana met an accident that resulted to his death while driving
his motorcycle on his way to work station. He was bumped by a PUJ jeep
which was driven by Pepito Into and was operated and owned by
defendant Destrajo, when he overtook another passenger jeep that was
going towards the city. The point of impact was on the lane of the
motorcycle and the deceased was thrown from the road and met his
untimely death. Thereafter, the heirs of the deceased filed an action
against Destrajo and the Afisco Insurance Corporation (AFISCO) for
damages and attorney’s fees.