Pan Malayan Insurance Corporation v CA (Insurance) PANMALAY is correct.

Article 2207 of the Civil Code is founded on the well-settled principle of

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