Pan Malayan Insurance Corporation v CA (Insurance)
Article 2207 of the Civil Code is founded on the well-settled principle of
G.R. No. 81026 April 3, 1990
PAN MALAYAN INSURANCE CORPORATION, petitioner, vs. COURT OF
APPEALS, ERLINDA FABIE AND
HER UNKNOWN DRIVER, respondents.
FACTS:
On December 10, 1985, PANMALAY filed a complaint for damages with
the RTC of Makati against private respondents Erlinda Fabie and her
driver. PANMALAY averred the following: that it insured a Mitsubishi Colt
Lancer car with plate No. DDZ-431 and registered in the name of
Canlubang Automotive Resources Corporation [CANLUBANG]; that on
May 26, 1985, due to the "carelessness, recklessness, and imprudence" of
the unknown driver of a pick-up with plate no. PCR-220, the insured car
was hit and suffered damages in the amount of P42,052.00; that
PANMALAY defrayed the cost of repair of the insured car and, therefore,
was subrogated to the rights of CANLUBANG against the driver of the
pick-up and his employer, Erlinda Fabie; and that, despite repeated
demands, defendants, failed and refused to pay the claim of PANMALAY.
private respondents filed a Motion to Dismiss alleging that PANMALAY
had no cause of action against them. They argued that payment under the
"own damage" clause of the insurance policy precluded subrogation
under Article 2207 of the Civil Code, since indemnification thereunder
was made on the assumption that there was no wrongdoer or no third
party at fault.
DECISION OF LOWER COURTS:
(1) Trial Court: dismissed for no cause of action PANMALAY's complaint
for damages against private respondents Erlinda Fabie and her driver
(2) CA: affirmed trial court.
ISSUE:
Whether or not the insurer PANMALAY may institute an action to recover
the 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 insured vehicle.
RULING:
PANMALAY is correct.
subrogation. If the insured property is destroyed or damaged through the
fault or negligence of a party other than the assured, then the insurer,
upon payment to the assured, will be subrogated to the rights of the
assured to recover from the wrongdoer to the extent that the 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 or negligence of a third
party. CANLUBANG is apparently of the same understanding. Based on a
police report assignment to the former of all remedies that the latter may
have against the third party whose negligence or wrongful act 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
simply upon payment of the insurance claim by the insurer.
The exceptions are:
(1) if the assured by his own act releases the wrongdoer or third party
liable for the loss or damage, from liability, the insurer's right of
subrogation is defeated
(2) where the insurer pays the assured the value of the lost goods
without notifying the carrier who has in good faith settled the assured's
claim for loss, the settlement is binding on both the assured and the
insurer, and the latter cannot bring an action against the carrier on his
right of subrogation
(3) where the insurer pays the assured for a loss which is not a risk
covered by the policy, thereby effecting "voluntary payment", the former
has no right of subrogation against the third party liable for the loss
None of the exceptions are availing in the present case.
Also, even if under the above circumstances PANMALAY could not be
deemed subrogated to the rights of its assured under Article 2207 of the
Civil Code, PANMALAY would still have a cause of action against private
respondents. In the pertinent case of Sveriges Angfartygs Assurans
Forening v. Qua Chee Gan, supra., 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 for the damage to
the insured property under Article 1236 of the Civil Code.
WHEREFORE, in view of the foregoing, the present petition is GRANTED.
Petitioner's complaint for damages against private respondents is hereby
REINSTATED. Let the case be remanded to the lower court for trial on the
merits.
De la Cruz v. Capital Ins. & Surety Co, Inc. (1966)
G.R. No. L-21574 June 30, 1966
Lessons Applicable: Liability of Insurer for Suicide and Accidental Death
(Insurance)
Laws Applicable:
FACTS:
 Eduardo de la Cruz, employed as a mucker in 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
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
owner’s consent or knowledge, such taking constitutes theft, and
therefore, 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
ISSUE:
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
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 insured and/or the other parties found at
fault.
ii. In the present case: Malayan as insurer of Sio Choy
is liable to Vallejos but it cannot be made a
solidarily liable with the 2 principal tortfeasor for
it will result in a violation of the principles
underlying solidary obligation and insurance
contracts.
1. Solidary obligation: the creditor may
enforce the entire obligation against one of
the solidary debtors
2. Insurance Contract: a contract whereby
one undertakes for a consideration to
indemnify another against loss, damage, or
liability arising from an unknown or
contingent event
iii. In this case the TC held Malayan as solidary liable
but qualified that only up to P20,000.00
1. This ruling is a breach of the concept of a
solidary obligation
2. Yes, Malayan upon paying Vallejos the amount exceeding P20,000
shall become the subrogee of the insured, Sio Choy; as such, it is
subrogated to whatever rights the latter has against respondent
San Leon Rice Mill,Inc.
Figuracion Vda. De Maglana v. Hon. Francisco Consolacion
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.
The lower court rendered a decision finding that Destrajo had not
exercised extraordinary diligence as the operator of the jeepney and
ordered him to pay for the damages. The second paragraph of the decision
also ordered AFISCO to reimburse Destrajo whatever amounts the latter
shall have paid only up to the extent of its insurance coverage, signifying
only secondary liability. The heirs however, filed a motion for
reconsideration with respect to the said second paragraph arguing that
AFISCO should not merely be held secondarily liable because the Insurance
Code providesthat the insurer’s liability is “direct and primary and/or
jointly and severally with theoperator of the vehicle”, although only up to
the extent of the insurance coverage.
ISSUE:
Whether or not AFISCO’s liability is direct and primary and/or solidary
with Destrajo.
HELD:
Although the insurance policy clearly provides that AFISCO can be held
directly liable by petitioners on the basis of the insurance contract,
nonetheless, AFISCO may not be held solidarily liable with Destrajo since
their respective liabilities are based on different grounds. The liability of
the insurer is based on contract; that of the insured is based on tort. As
such, petitioners have the option either to claim from AFISCO to the extent
agreed upon in the contract and the balance from Destrajo or enforce the
entire judgment from Destrajo subject to reimbursement from AFISCO to
the extent of the insurance coverage.