2nd Batch Insurance

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G.R. No. L-8151 December 16, 1955

VIRGINIA CALANOC, petitioner,vs.COURT OF APPEALS and THE PHILIPPINE AMERICAN LIFE INSURANCECO., respondents.

Lucio Javillonar for petitioner.J. A. Wolfson, Manuel Y. Mecias, Emilio Abello and Anselmo A. Reyes for respondents.

BAUTISTA ANGELO, J.:

This suit involves the collection of P2,000 representing the value of a supplemental policycovering accidental death which was secured by one Melencio Basilio from the Philippine

American Life Insurance Company. The case originated in the Municipal Court of Manila and

judgment being favorable to the plaintiff it was appealed to the court of first instance. The lattercourt affirmed the judgment but on appeal to the Court of Appeals the judgment was reversedand the case is now before us on a petition for review.

Melencio Basilio was a watchman of the Manila Auto Supply located at the corner of AvenidaRizal and Zurbaran. He secured a life insurance policy from the Philippine American LifeInsurance Company in the amount of P2,000 to which was attached a supplementary contractcovering death by accident. On January 25, 1951, he died of a gunshot wound on the occasionof a robbery committed in the house of Atty. Ojeda at the corner of Oroquieta and Zurbaanstreets. Virginia Calanoc, the widow, was paid the sum of P2,000, face value of the policy, butwhen she demanded the payment of the additional sum of P2,000 representing the value of thesupplemental 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 andwhile making an arrest as an officer of the law which contingencies were expressly excluded inthe contract and have the effect of exempting the company from liability.

The pertinent facts which need to be considered for the determination of the questions raisedare those reproduced in the decision of the Court of Appeals as follows:

The circumstances surrounding the death of Melencio Basilio show that when he waskilled at about seven o'clock in the night of January 25, 1951, he was on duty aswatchman of the Manila Auto Supply at the corner of Avenida Rizal and Zurbaran; that itturned out that Atty. Antonio Ojeda who had his residence at the corner of Zurbaran andOroquieta, a block away from Basilio's station, had come home that night and found that

his house was well-lighted, but with the windows closed; that getting suspicious thatthere were culprits in his house, Atty. Ojeda retreated to look for a policeman and findingBasilio in khaki uniform, asked him to accompany him to the house with the latterrefusing on the ground that he was not a policeman, but suggesting that Atty. Ojedashould ask the traffic policeman on duty at the corner of Rizal Avenue and Zurbaran; that

Atty. Ojeda went to the traffic policeman at said corner and reported the matter, askingthe policeman to come along with him, to which the policeman agreed; that on the wayto the Ojeda residence, the policeman and Atty. Ojeda passed by Basilio and somehowor other invited the latter to come along; that as the tree approached the Ojeda


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residence and stood in front of the main gate which was covered with galvanized iron,the fence itself being partly concrete and partly adobe stone, a shot was fired; thatimmediately after the shot, Atty. Ojeda and the policeman sought cover; that thepoliceman, at the request of Atty. Ojeda, left the premises to look for reinforcement; thatit turned out afterwards that the special watchman Melencio Basilio was hit in theabdomen, the wound causing his instantaneous death; that the shot must have come

from inside the yard of Atty. Ojeda, the bullet passing through a hole waist-high in thegalvanized iron gate; that upon inquiry Atty. Ojeda found out that the savings of hischildren in the amount of P30 in coins kept in his aparador contained in stockings weretaken away, the aparador having been ransacked; that a month thereafter thecorresponding investigation conducted by the police authorities led to the arrest andprosecution of four persons in Criminal Case No. 15104 of the Court of First Instance ofManila for 'Robbery in an Inhabited House and in Band with Murder'.

It is contended in behalf of the company that Basilio was killed which "making an arrest as anofficer of the law" or as a result of an "assault or murder" committed in the place and thereforehis death was caused by one of the risks excluded by the supplementary contract whichexempts the company from liability. This contention was upheld by the Court of Appeals and, in

reaching this conclusion, made the following comment:

From the foregoing testimonies, we find that the deceased was a watchman of theManila Auto Supply, and, as such, he was not boud to leave his place and go with Atty.Ojeda and Policeman Magsanoc to see the trouble, or robbery, that occurred in thehouse of Atty. Ojeda. In fact, according to the finding of the lower court, Atty. Ojedafinding Basilio in uniform asked him to accompany him to his house, but the latterrefused on the ground that he was not a policeman and suggested to Atty. Ojeda to askhelp from the traffic policeman on duty at the corner of Rizal Avenue and Zurbaran, butafter Atty. Ojeda secured the help of the traffic policeman, the deceased went with Ojedaand said traffic policeman to the residence of Ojeda, and while the deceased wasstanding in front of the main gate of said residence, he was shot and thus died. The

death, therefore, of Basilio, although unexpected, was not caused by an accident, beinga voluntary and intentional act on the part of the one wh robbed, or one of those whorobbed, the house of Atty. Ojeda. Hence, it is out considered opinion that the death ofBasilio, though unexpected, cannot be considered accidental, for his death occurredbecause he left his post and joined policeman Magsanoc and Atty. Ojeda to repair to thelatter's residence to see what happened thereat. Certainly, when Basilio joinedPatrolman Magsanoc and Atty. Ojeda, he should have realized the danger to which hewas exposing himself, yet, instead of remaining in his place, he went with Atty. Ojedaand Patrolman Magsanoc to see what was the trouble in Atty. Ojeda's house and thushe was fatally shot.

We dissent from the above findings of the Court of Appeals. For one thing, Basilio was a

watchman of the Manila Auto Supply which was a block away from the house of Atty. Ojedawhere something suspicious was happening which caused the latter to ask for help. While atfirst he declied the invitation of Atty. Ojeda to go with him to his residence to inquire into whatwas going on because he was not a regular policeman, he later agreed to come along whenprompted by the traffic policeman, and upon approaching the gate of the residence he was shotand died. The circumstance that he was a mere watchman and had no duty to heed the call of

Atty. Ojeda should not be taken as a capricious desire on his part to expose his life to dangerconsidering the fact that the place he was in duty-bound to guard was only a block away. In


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We are therefore persuaded to conclude that the circumstances unfolded in the present case donot warrant the finding that the death of the unfortunate victim comes within the purview of theexception clause of the supplementary policy and, hence, do not exempt the company fromliability.

Wherefore, reversing the decision appealed from, we hereby order the company to pay

petitioner-appellant the amount of P2,000, with legal interest from January 26, 1951 until fullypaid, with costs.

Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Labrador, Concepcion, andReyes, J. B. L., JJ., concur.

Calanoc vs. CA (98 PHIL 79)Post undercase digests,Commercial LawatWednesday, February 22, 2012Postedby Schizophrenic Mind

Facts: 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

InsuranceCompany 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. 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 was caused by one of the risks excluded by the supplementary contract which

exempts the company from liability. This contention was upheld by the Court of Appeals. Hence,

this petition.

Issue: Whether or not the death of the victim comes within the purview of the exception clause

of the supplementary policy and, hence, exempts the company from liability.
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Held: NO. Basilio was a watchman of the Manila Auto Supply which was a block away from the

house of Atty. Ojeda where something suspicious was happening which caused the latter to ask

for help. While at first he declined the invitation of Atty. Ojeda to go with him to his residence to

inquire into what was going on because he was not a regular policeman, he later agreed to

come along when prompted by the traffic policeman, and upon approaching the gate of the

residence he was shot and died. The circumstance that he was a mere watchman and had no

duty to heed the call of Atty. Ojeda should not be taken as a capricious desire on his part to

expose his life to danger considering the fact that the place he was in duty-bound to guard was

only a block away. In volunteering to extend help under the situation, he might have thought,

rightly or wrongly, that to know the truth was in the interest of his employer it being a matter that

affects the security of the neighborhood. No doubt there was some risk coming to him in

pursuing that errand, but that risk always existed it being inherent in the position he was holding.

He cannot therefore be blamed solely for doing what he believed was in keeping with his duty

as a watchman and as a citizen. And he cannot be considered as making an arrest as an officer

of the law, as contended, simply because he went with the traffic policeman, for certainly he did

not go there for that purpose nor was he asked to do so by the policeman.

Much less can it be pretended that Basilio died in the course of an assault or murder

considering the very nature of these crimes. In the first place, 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. Perhaps this may be clarified in thecriminal case now pending in court as

regards the incident but before that is done anything that might be said on the point would be a

mere conjecture. 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. In any event, 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. The victim could have been either the policeman or Atty.

Ojeda for it cannot be pretended that the malefactor aimed at the deceased precisely because

he wanted to take his life.


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G.R. No. L-25579 March 29, 1972

EMILIA T. BIAGTAN, JUAN T. BIAGTAN, JR., MIGUEL T. BIAGTAN, GIL T. BIAGTAN andGRACIA T. BIAGTAN,plaintiffs-appellees,vs.THE INSULAR LIFE ASSURANCE COMPANY, LTD., defendant-appellant.

Tanopo, Millora, Serafica, and Saez for plaintiff-appellees.

Araneta, Mendoza and Papa for defendant-appellant.

MAKALINTAL, J.:p

This is an appeal from the decision of the Court of First Instance of Pangasinan in its Civil CaseNo. D-1700.

The facts are stipulated. Juan S. Biagtan was insured with defendant InsularLife AssuranceCompany under Policy No. 398075 for the sum of P5,000.00 and, under a supplementarycontract 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 andviolent 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 aninjury"intentionally inflicted by another party."

On the night of May 20, 1964, or during the first hours of the following day a band of robbersentered the house of the insured Juan S. Biagtan. What happened then is related in thedecision of the trial court as follows:

...; that on the night of May 20, 1964 or the first hours of May 21, 1964, while thesaid life policy and supplementary contract were in full force and effect, thehouse of insured Juan S. Biagtan was robbed by a band of robbers who werecharged in and convicted by the Court of First Instance of Pangasinan forrobbery with homicide; that in committing the robbery, the robbers, on reachingthe staircase landing on the second floor, rushed towards the door of the secondfloor room, where they suddenly met a person near the door of oneof the roomswho turned out to be the insured Juan S. Biagtan who received thrusts from theirsharp-pointed instruments, causing wounds on the body of said Juan S. Biagtanresulting 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 companypaid the basic amount of P5,000.00 but refused to pay the additional sum of P5,000.00 underthe accidental death benefit clause, on the ground that the insured's death resulted from injuriesintentionally inflicted by third parties and therefore was not covered. Plaintiffs filed suit torecover, and after due hearing the court a quo rendered judgment in their favor. Hence thepresent appeal by the insurer.

The only issue here is whether under the facts are stipulated and found by the trial court thewounds received by the insured at the hands of the robbers nine in all, five of them mortal


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and four non-mortal were inflicted intentionally. The court, in ruling negatively on the issue,stated that since the parties presented no evidence and submitted the case upon stipulation,there was no "proof that the act of receiving thrust (sic) from the sharp-pointed instrument of therobbers was intended to inflict injuries upon the person of the insured or any other person ormerely to scare away any person so as to ward off any resistance or obstacle that might beoffered in the pursuit of their main objective which was robbery."

The trial court committed a plain error in drawing the conclusion it did from the admitted facts.Nine wounds were inflicted upon the deceased, all by means of thrusts with sharp-pointedinstruments wielded by the robbers. This is a physical fact as to which there is no dispute. So isthe fact that five of those wounds caused the death of the insured. Whether the robbers had theintent to kill or merely to scare the victim or to ward off any defense he might offer, it cannot bedenied that the act itself of inflicting the injuries was intentional. It should be noted that theexception in the accidental benefit clause invoked by the appellant does not speak of thepurpose whether homicidal or not of a third party in causing the injuries, but only of thefact that such injuries have been "intentionally" inflicted this obviously to distinguish themfrom injuries which, although received at the hands of a third party, are purely accidental. Thisconstruction is the basic idea expressed in the coverage of the clause itself, namely, that "the

death of the insured resulted directly from bodily injury effected solely through external andviolent means sustained in an accident... and independently of all other causes." A gun whichdischarges while being cleaned and kills a bystander; a hunter who shoots at his prey and hits aperson instead; an athlete in a competitive game involving physical effort who collides with anopponent and fatally injures him as a result: these are instances where the infliction of the injuryis unintentional and therefore would be within the coverage of an accidental death benefitclause such as thatin question in this case. But where a gang of robbers enter a house andcoming face to face with the owner, even if unexpectedly, stab him repeatedly, it is contrary toall reason and logic to say that his injuries are not intentionally inflicted, regardless of whetherthey prove fatal or not. As it was, in the present case they did prove fatal, and the robbers havebeen accused and convicted of the crime of robbery with homicide.

The case ofCalanoc vs. Court of Appeals, 98 Phil. 79, is relied upon by the trial court in supportof its decision. The facts in that case, however, are different from those obtaining here. Theinsured there was a watchman in a certain company, who happened to be invited by apoliceman to come along as the latter was on his way to investigate a reported robbery going onin a private house. As the two of them, together with the owner of the house, approached andstood in front of the main gate, a shot was fired and it turned out afterwards that the watchmanwas hit in the abdomen, the wound causing his death. Under those circumstances this Courtheld that it could not be said that the killing was intentional for there was the possibility that themalefactor had fired the shot to scare people around for his own protection and not necessarrilyto kill or hit the victim. A similar possibility is clearly ruled out by the facts in the case now beforeUs. For while a single shot fired from a distance, and by a person who was not even seenaiming 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 innocentinsofar as such intent is concerned. The manner of execution of the crime permits no otherconclusion.

Court decisions in the American jurisdiction, where similar provisions in accidental death benefitclauses in insurance policies have been construed, may shed light on the issue before Us.Thus, it has been held that "intentional" as used in an accident policy excepting intentionalinjuries inflicted by the insured or any other person, etc., implies the exercise of the reasoning


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faculties, consciousness and volition. 1Where a provision of the policy excludes intentionalinjury, it is the intention of the person inflicting the injury that is controlling. 2 If the injuriessuffered by the insured clearly resulted from the intentional act of a third person the insurer isrelieved from liability as stipulated. 3

In the case ofHutchcraft's Ex'r v. Travelers' Ins. Co., 87 Ky. 300, 8 S.W. 570, 12 Am. St. Rep.

484, the insured was waylaid and assassinated for the purpose of robbery. Two (2) defenseswere interposed to the action to recover indemnity, namely: (1) that the insured having beenkilled by intentional means, his death was not accidental, and (2) that the proviso in the policyexpressly exempted the insurer from liability in case the insured died from injuries intentionallyinflicted by another person. In rendering judgment for the insurance company the Court heldthat while the assassination of the insured was as to him an unforeseen event and thereforeaccidental, "the clause of the proviso that excludes the (insurer's) liability, in case death or injuryis intentionally inflicted by another person, applies to this case."

In Butero v. Travelers' Acc. Ins. Co., 96 Wis. 536, 65 Am. St. Rep. 61, 71 S.W. 811, the insuredwas shot three times by a person unknown late on a dark and stormy night, while working in thecoal shed of a railroad company. The policy did not cover death resulting from "intentional

injuries inflicted by the insured or any other person." The inquiry was as to the question whetherthe shooting that caused the insured's death was accidental or intentional; and the Court foundthat under the facts, showing that the murderer knew his victim and that he fired with intent tokill, there could be no recovery under the policy which excepted death from intentional injuriesinflicted by any person.

WHEREFORE, the decision appealed from is reversed and the complaint dismissed, withoutpronouncement as to costs.

Zaldivar, Castro, Fernando and Villamor, JJ., concur.

Makasiar, J., reserves his vote.

BIAGTAN VS. THE INSULAR LIFE ASSURANCE COMPANY LTD.

44 SCRA 58 (G.R. NO. L-25579)

MARCH 29, 1972

Petitioner/Appellant: The Insular Life Assurance Company Ltd.

Respondent/Appellee: Emilia T. Biagtan, Juan T. Biagtan, Jr., Miguel T.

Biagtan, Gil T. Biagtan and Gracia T. Biagtan

J. Makalintal:

FACT:

Juan S. Biagtan was insured with defendant Insular Life Assurance Company Ltd. for the sum of

5,000.00 and under a supplementary contract denominated Accidental Death Benefit Clause,

for an additional sum of 5,000.00 if the death of the insured resulted directly from bodily injury

effected solely through external and violent means sustained in an accident and


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JEWEL VILLACORTA, assisted by her husband, GUERRERO VILLACORTA, petitioner,vs.THE INSURANCE COMMISSION and EMPIRE INSURANCE COMPANY, respondents.

TEEHANKEE, Acting C.J.:

The Court sets aside respondent Insurance Commission's dismissal of petitioner's complaintand holds that where the insured's car is wrongfully taken without the insured's consent from thecar service and repair shop to whom it had been entrusted for check-up and repairs (assumingthat 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 underthe theft clause of the policy.

The undisputed facts of the case as found in the appealed decision of April 14, 1980 ofrespondent insurance commission are as follows:

Complainant [petitioner] was the owner of a Colt Lancer, Model 1976, insuredwith respondent company under Private Car Policy No. MBI/PC-0704 forP35,000.00 Own Damage; P30,000.00 Theft; and P30,000.00 ThirdParty Liability, effective May 16, 1977 to May 16, 1978. On May 9, 1978, thevehicle was brought to the Sunday Machine Works, Inc., for general check-upand repairs. On May 11, 1978, while it was in the custody of the Sunday MachineWorks, the car was allegedly taken by six (6) persons and driven out toMontalban, Rizal. While travelling along Mabini St., Sitio Palyasan, BarrioBurgos, going North at Montalban, Rizal, the car figured in an accident, hittingand bumping a gravel and sand truck parked at the right side of the road goingsouth. As a consequence, the gravel and sand truck veered to the right side ofthe pavement going south and the car veered to the right side of the pavementgoing north. The driver, Benito Mabasa, and one of the passengers died and theother four sustained physical injuries. The car, as well, suffered extensivedamage. Complainant, thereafter, filed a claim for total loss with the respondentcompany but claim was denied. Hence, complainant, was compelled to institutethe present action.

The comprehensive motor car insurance policy for P35,000.00 issued by respondent EmpireInsurance Company admittedly undertook to indemnify the petitioner-insured against loss ordamage to the car (a) by accidental collision or overturning, or collision or overturningconsequent upon mechanical breakdown or consequent upon wear and tear; (b) by fire,external explosion, self-ignition or lightning or burglary, housebreaking or theft; and (c) by

malicious act.

Respondent insurance commission, however, dismissed petitioner's complaint for recovery ofthe total loss of the vehicle against private respondent, sustaining respondent insurer'scontention that the accident did not fall within the provisions of the policy either for the OwnDamage or Theft coverage, invoking the policy provision on "Authorized Driver" clause. 1

Respondent commission upheld private respondent's contention on the "Authorized Driver"clause in this wise: "It must be observed that under the above-quoted provisions, the policy


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limits the use of the insured vehicle to two (2) persons only, namely: the insured himself or anyperson on his (insured's) permission. Under the second category, it is to be noted that the words"any person' is qualified by the phrase

... on the insured's order or with his permission.' It is therefore clear that if theperson driving is other than the insured, he must have been duly authorized by

the insured, to drive the vehicle to make the insurance company liable for thedriver's negligence. Complainant admitted that she did not know the person whodrove her vehicle at the time of the accident, much less consented to the use ofthe same (par. 5 of the complaint). Her husband likewise admitted that he neitherknew this driver Benito Mabasa (Exhibit '4'). With these declarations ofcomplainant and her husband, we hold that the person who drove the vehicle, inthe person of Benito Mabasa, is not an authorized driver of the complainant.

Apparently, this is a violation of the 'Authorized Driver' clause of the policy.

Respondent commission likewise upheld private respondent's assertion that the car was notstolen and therefore not covered by the Theft clause, ruling that "The element of 'taking' in

Article 308 of the Revised Penal Code means that the act of depriving another of the

possession and dominion of a movable thing is coupled ... with the intention. at the time of the'taking', of withholding it with the character of permanency (People vs. Galang, 7 Appt. Ct. Rep.13). In other words, there must have been shown a felonious intent upon the part of the taker ofthe car, and the intent must be an intent permanently to deprive the insured of his car," and that"Such was not the case in this instance. The fact that the car was taken by one of the residentsof the Sunday Machine Works, and the withholding of the same, for a joy ride should not beconstrued to mean 'taking' under Art. 308 of the Revised Penal Code. If at all there was a'taking', the same was merely temporary in nature. A temporary taking is held not a takinginsured against (48 A LR 2d., page 15)."

The Court finds respondent commission's dismissal of the complaint to be contrary to theevidence and the law.

First, respondent commission's ruling that the person who drove the vehicle in the person ofBenito Mabasa, who, according to its finding, was one of the residents of the Sunday MachineWorks, Inc. to whom the car had been entrusted for general check-up and repairs was not an"authorized driver" of petitioner-complainant is too restrictive and contrary to the establishedprinciple that insurance contracts, being contracts of adhesion where the only participation ofthe other party is the signing of his signature or his "adhesion" thereto, "obviously call for greaterstrictness and vigilance on the part of courts of justice with a view of protecting the weaker partyfrom abuse and imposition, and prevent their becoming traps for the unwary. 2

The main purpose of the "authorized driver" clause, as may be seen from its text, supra, is thata person other than the insured owner, who drives the car on the insured's order, such as hisregular driver, or with his permission, such as a friend or member of the family or the employeesof a car service or repair shop must be duly licensed drivers and have no disqualification todrive a motor vehicle.

A car owner who entrusts his car to an established car service and repair shop necessarilyentrusts his car key to the shop owner and employees who are presumed to have the insured'spermission to drive the car for legitimate purposes of checking or road-testing the car. The merehappenstance that the employee(s) of the shop owner diverts the use of the car to his own illicit


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or unauthorized purpose in violation of the trust reposed in the shop by the insured car ownerdoes not mean that the "authorized driver" clause has been violated such as to bar recovery,provided that such employee is duly qualified to drive under a valid driver's license.

The situation is no different from the regular or family driver, who instead of carrying out theowner's order to fetch the children from school takes out his girl friend instead for a joy ride and

instead wrecks the car. There is no question of his being an "authorized driver" which allowsrecovery of the loss although his trip was for a personal or illicit purpose without the owner'sauthorization.

Secondly, and independently of the foregoing (since when a car is unlawfully taken, it is the theftclause, not the "authorized driver" clause, that applies), where a car is admittedly as in this caseunlawfully and wrongfully taken by some people, be they employees of the car shop or not towhom it had been entrusted, and taken on a long trip to Montalban without the owner's consentor knowledge, such taking constitutes or partakes of the nature of theft as defined in Article 308of the Revised Penal Code, viz. "Who are liable for theft. Theft is committed by any personwho, with intent to gain but without violence against or intimidation of persons nor force uponthings, shall take personal property of another without the latter's consent," for purposes of

recovering the loss under the policy in question.

The Court rejects respondent commission's premise that there must be an intent on the part ofthe taker of the car "permanently to deprive the insured of his car" and that since the taking herewas for a "joy ride" and "merely temporary in nature," a "temporary taking is held not a takinginsured against."

The evidence does not warrant respondent commission's findings that it was a mere "joy ride".From the very investigator's report cited in its comment, 3the police found from the waist of thecar driver Benito Mabasa Bartolome who smashed the car and was found dead right after theincident "one cal. 45 Colt. and one apple type grenade," hardly the materials one would bringalong on a "joy ride". Then, again, it is equally evident that the taking proved to be quitepermanent rather than temporary, for the car was totally smashed in the fatal accident and wasnever returned in serviceable and useful condition to petitioner-owner.

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 withthe object of going to a certain place, or learning how to drive, or enjoying a free ride, takespossession of a vehicle belonging to another, without the consent of its owner, he is guilty oftheft 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 andpleasure. Justice Ramon C. Aquino cites in his work Groizard who holds that the use of a thingconstitutes gain and Cuello Calon who calls it "hurt de uso. " 4

The insurer must therefore indemnify the petitioner-owner for the total loss of the insured car inthe sum of P35,000.00 under the theft clause of the policy, subject to the filing of such claim forreimbursement or payment as it may have as subrogee against the Sunday Machine Works,Inc.

ACCORDINGLY, the appealed decision is set aside and judgment is hereby renderedsentencing private respondent to pay petitioner the sum of P35,000.00 with legal interest fromthe filing of the complaint until full payment is made and to pay the costs of suit.


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SO ORDERED.

Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

Footnotes

1 The "Authorized Driver" clause reads, thus:

AUTHORIZED DRIVER: Any of the following:

(a) The insured

(b) Any person driving on the Insured's Order, or with his permission; Provided,that the person driving is permitted, in accordance with the licensing or otherlaws or regulations, to drive the Scheduled Vehicle, or has been permitted and is

not disqualified by order of a Court of Law or by reason or any enactment orregulation in that behalf."

JEWEL VILLACORTA vs. THE INSURANCE COMMISSION

G.R. No. L-54171, 28 October 1980 100 SCRA 467FACTS:Villacorta had her Colt Lancer car insured with Empire Insurance Company against owndamage, theft and 3rd party 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. Thisresulted to the death of the driver and some of the passengers as well as to extensivedamage to the car. Villacorta filed a claim for total loss with the said insurance company.However, it denied the claim on the ground that theaccident did not fall within the provisions of the policy either for the Own Damage or Theftcoverage, invoking the policy provision on Authorized Driver Clause. This was upheld by theInsurance Commission further statingthat the car was not stolen and therefore not covered by the Theft Clause because it is notevident that the person who took the car for a joyride intends to permanently deprive the insuredof his/ her car.ISSUE:

Whether or not the insurer company should pay the said claimHELD:Yes. Where the insureds car is wrongfully taken without the insureds consent from the carservice and repair shop to whom it had been entrusted for check-up and repairs (assuming thatsuch 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 underthe Theft Clause of the policy. Assuming, despite the totally inadequate evidence, that thetaking was temporary and for a joy ride, the Court sustains as the better view that which


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holds that when a person, eitherwith the object of going to a certain place, or learning how to drive, or enjoying a free ride, takespossession of a vehicle belonging to another, without the consent of its owner, he is guilty oftheft because by taking possession of the personal property belonging to another and using it,his intent to gain is evident since he derives there from utility, satisfaction, enjoymet and

pleasure. ACCORDINGLY, the appealed decision is set aside and judgment is hereby renderedsentencing private respondent to pay petitioner the sum of P35,000.00 with legal interest fromthefiling of the complaint until full payment is made and to pay the costs of suit.

G.R. No. 60506 August 6, 1992

FIGURACION VDA. DE MAGLANA, EDITHA M. CRUZ, ERLINDA M. MASESAR, LEONILA

M. MALLARI, GILDA ANTONIO and the minors LEAH, LOPE, JR., and ELVIRA, allsurnamed MAGLANA, herein represented by their mother, FIGURACION VDA. DEMAGLANA, petitioners,vs.HONORABLE FRANCISCO Z. CONSOLACION, Presiding Judge of Davao City, Branch II,and AFISCO INSURANCE CORPORATION, respondents.

Jose B. Guyo for petitioners.

Angel E. Fernandez for private respondent.

ROMERO, J.:

The nature of the liability of an insurer sued together with the insured/operator-owner of acommon carrier which figured in an accident causing the death of a third person is sought to bedefined in this petition forcertiorari.

The facts as found by the trial court are as follows:

. . . Lope Maglana was an employee of the Bureau of Customs whose workstation was at Lasa, here in Davao City. On December 20, 1978, early morning,Lope Maglana was on his way to his work station, driving a motorcycle owned bythe Bureau of Customs. At Km. 7, Lanang, he met an accident that resulted in hisdeath. He died on the spot. The PUJ jeep that bumped the deceased was drivenby Pepito Into, operated and owned by defendant Destrajo. From theinvestigation conducted by the traffic investigator, the PUJ jeep was overtakinganother passenger jeep that was going towards the city poblacion. Whileovertaking, the PUJ jeep of defendant Destrajo running abreast with theovertaken jeep, bumped the motorcycle driven by the deceased who was goingtowards the direction of Lasa, Davao City. The point of impact was on the lane of


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the motorcycle and the deceased was thrown from the road and met his untimelydeath. 1

Consequently, the heirs of Lope Maglana, Sr., here petitioners, filed an action for damages andattorney's fees against operator Patricio Destrajo and the Afisco Insurance Corporation(AFISCO for brevity) before the then Court of First Instance of Davao, Branch II. An information

for homicide thru reckless imprudence was also filed against Pepito Into.

During the pendency of the civil case, Into was sentenced to suffer an indeterminate penalty ofone (1) year, eight (8) months and one (1) day ofprision correccional, as minimum, to four (4)years, nine (9) months and eleven (11) days ofprision correccional, as maximum, with all theaccessory penalties provided by law, and to indemnify the heirs of Lope Maglana, Sr. in theamount of twelve thousand pesos (P12,000.00) with subsidiary imprisonment in case ofinsolvency, plus five thousand pesos (P5,000.00) in the concept of moral and exemplarydamages with costs. No appeal was interposed by accused who later applied for probation. 2

On December 14, 1981, the lower court rendered a decision finding that Destrajo had notexercised sufficient diligence as the operator of the jeepney. The dispositive portion of thedecision reads:

WHEREFORE, the Court finds judgment in favor of the plaintiffs againstdefendant Destrajo, ordering him to pay plaintiffs the sum of P28,000.00 for lossof income; to pay plaintiffs the sum of P12,000.00 which amount shall bededucted in the event judgment in Criminal Case No. 3527-D against the driver,accused Into, shall have been enforced; to pay plaintiffs the sum of P5,901.70representing funeral and burial expenses of the deceased; to pay plaintiffs thesum of P5,000.00 as moral damages which shall be deducted in the event

judgment (sic) in Criminal Case No. 3527-D against the driver, accused Into; topay plaintiffs the sum of P3,000.00 as attorney's fees and to pay the costs of suit.

The defendant insurance company is ordered to reimburse defendant Destrajowhatever amounts the latter shall have paid only up to the extent of its insurancecoverage.

SO ORDERED. 3

Petitioners filed a motion for the reconsideration of the second paragraph of the dispositiveportion of the decision contending that AFISCO should not merely be held secondarily liablebecause the Insurance Code provides that the insurer's liability is "direct and primary and/or

jointly and severally with the operator of the vehicle, although only up to the extent of theinsurance coverage." 4 Hence, they argued that the P20,000.00 coverage of the insurance

policy issued by AFISCO, should have been awarded in their favor.

In its comment on the motion for reconsideration, AFISCO argued that since the InsuranceCode does not expressly provide for a solidary obligation, the presumption is that the obligationis joint.

In its Order of February 9, 1982, the lower court denied the motion for reconsideration ruling thatsince the insurance contract "is in the nature of suretyship, then the liability of the insurer issecondary only up to the extent of the insurance coverage." 5


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Petitioners filed a second motion for reconsideration reiterating that the liability of the insurer isdirect, primary and solidary with the jeepney operator because the petitioners became directbeneficiaries under the provision of the policy which, in effect, is a stipulation pour autrui.6Thismotion was likewise denied for lack of merit.

Hence, petitioners filed the instant petition forcertiorariwhich, although it does not seek the

reversal of the lower court's decision in its entirety, prays for the setting aside or modification ofthe second paragraph of the dispositive portion of said decision. Petitioners reassert theirposition that the insurance company is directly and solidarily liable with the negligent operatorup to the extent of its insurance coverage.

We grant the petition.

The particular provision of the insurance policy on which petitioners base their claim is asfollows:

Sec. 1 LIABILITY TO THE PUBLIC

1. The Company will, subject to the Limits of Liability, pay all sums necessary todischarge liability of the insured in respect of

(a) death of or bodily injury to any THIRD PARTY

(b) . . . .

2. . . . .

3. In the event of the death of any person entitled to indemnity under this Policy,the Company will, in respect of the liability incurred to such person indemnify hispersonal representatives in terms of, and subject to the terms and conditionshereof. 7

The above-quoted provision leads to no other conclusion but that AFISCO can be held directlyliable by petitioners. As this Court ruled in Shafer vs. Judge, RTC of Olongapo City, Br. 75,"[w]here an insurance policy insures directly against liability, the insurer's liability accruesimmediately upon the occurrence of the injury or even upon which the liability depends, anddoes not depend on the recovery of judgment by the injured party against the insured." 8 Theunderlying reason behind the third party liability (TPL) of the Compulsory Motor Vehicle LiabilityInsurance is "to protect injured persons against the insolvency of the insured who causes such

injury, and to give such injured person a certain beneficial interest in the proceeds of the policy .. ." 9 Since petitioners had received from AFISCO the sum of P5,000.00 under the no-faultclause, AFISCO's liability is now limited to P15,000.00.

However, we cannot agree that AFISCO is likewise solidarily liable with Destrajo. In MalayanInsurance Co., Inc. v. Court of Appeals, 10this Court had the opportunity to resolve the issue asto the nature of the liability of the insurer and the insured vis-a-vis the third party injured in anaccident. We categorically ruled thus:


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While it is true that where the insurance contract provides for indemnity againstliability to third persons, such third persons can directly sue the insurer,however, 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 theinsured and/or the other parties found at fault. The liability of the insurer is basedon contract; that of the insured is based on tort.

In the case at bar, petitioner as insurer of Sio Choy, is liable to respondentVallejos (the injured third party), but it cannot, as incorrectly held by the trialcourt, be made "solidarily" liable with the two principal tortfeasors, namelyrespondents Sio Choy and San Leon Rice Mill, Inc. For if petitioner-insurer weresolidarily liable with said, two (2) respondents by reason of the indemnity contractagainst third party liability under which an insurer can be directly sued by athird party this will result in a violation of the principles underlying solidaryobligation and insurance contracts. (emphasis supplied)

The Court then proceeded to distinguish the extent of the liability and manner of enforcing thesame in ordinary contracts from that of insurance contracts. While in solidary obligations, the

creditor may enforce the entire obligation against one of the solidary debtors, in an insurancecontract, the insurer undertakes for a consideration to indemnify the insured against loss,damage or liability arising from an unknown or contingent event. 11 Thus, petitioner therein,which, under the insurance contract is liable only up to P20,000.00, can not be made solidarilyliable with the insured for the entire obligation of P29,013.00 otherwise there would result "anevident breach of the concept of solidary obligation."

Similarly, petitioners herein cannot validly claim that AFISCO, whose liability under theinsurance policy is also P20,000.00, can be held solidarily liable with Destrajo for the totalamount of P53,901.70 in accordance with the decision of the lower court. Since under both thelaw and the insurance policy, AFISCO's liability is only up to P20,000.00, the second paragraphof the dispositive portion of the decision in question may have unwittingly sown confusion

among the petitioners and their counsel. What should have been clearly stressed as to leave noroom for doubt was the liability of AFISCO under the explicit terms of the insurance contract.

In fine, we conclude that the liability of AFISCO based on the insurance contract is direct, butnot solidary with that of Destrajo which is based on Article 2180 of the Civil Code. 12As such,petitioners have the option either to claim the P15,000 from AFISCO and the balance fromDestrajo or enforce the entire judgment from Destrajo subject to reimbursement from AFISCO tothe extent of the insurance coverage.

While the petition seeks a definitive ruling only on the nature of AFISCO's liability, we noticedthat the lower court erred in the computation of the probable loss of income. Using the formula:2/3 of (80-56) x P12,000.00, it awarded P28,800.00. 13 Upon recomputation, the correct amountis P192,000.00. Being a "plain error," we opt to correct the same. 14Furthermore, in accordancewith prevailing jurisprudence, the death indemnity is hereby increased to P50,000.00. 15

WHEREFORE, premises considered, the present petition is hereby GRANTED. The award ofP28,800.00 representing loss of income is INCREASED to P192,000.00 and the deathindemnity of P12,000.00 to P50,000.00.

SO ORDERED.


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Vda. De Maglana v. Consolacion212 SCRA 268Romero,J.;

FACTS: Lope Mag lana me tan acc iden t w hi l e d r iv ing a mo tor cyc l e o wne d b y B ure au o f Customs whichresulted to his death. The jeep in which his motorcycle collided was operated andown ed byDes t ra jo . H i s w idow f i l ed an ac t i on f o r damages aga ins t Des t ra jo and

A FI SCO I nsura nce Corpo ra t ion . The RTC he ld AFIS CO t o b e secon dar i l y l iab le fo r th e aw ar de ddamages. Pet it ioner asserted the lower courts decisionand provided that the Insurance Code expressly provides that the insurers liabilityis d irect and primary and or jointly and severa lly with the operator of the vehicle.

ISSUE: Whether or not the insured is solidarily liable with Destrajo

.HELD: No. The liability of the inusred is primary and direct but not solidarily withDestrajo.W h e r e t h e i n s u r e r d i r e c t l y i n s u r e s l i a b i l i t y , t h e l i a b i l i t y a cc r u e s i m m e d i a t e l y u p o n t h e concurrence of the injury or even upon which thel iabil i ty depends and does not depend on therec ov er y of the ju dg men t by th ei n j u red pa r t y aga ins t t he i nsu red , The re f o re , t he i nsu re r s liability is direct and

primary, but its liability is only up to the extent of the amount insured.

G.R. No. 78860 May 28, 1990

PERLA COMPANIA DE SEGUROS, INC., petitioner,vs.HONORABLE COURT OF APPEALS and MILAGROS CAYAS, respondents.

Yabut, Arandia & Associates for petitioner.

Dolorfino and Dominguez Law Offices for private respondent.

FERNAN, C.J.:

This is a petition for review on certiorariof the decision of the Court of Appeals 1affirming intoto the decision of the Regional Trial Court of Cavite, Branch XVI, 2the dispositive portion ofwhich states:

IN VIEW OF THE FOREGOING, judgment is hereby rendered orderingdefendant Perla Compania de Seguros, Inc. to pay plaintiff Milagros Cayas thesum of P50,000.00 under its maximum liability as provided for in the insurancepolicy; and the sum of P5,000.00 as reasonable attorney's fee with costs againstsaid defendant.

SO ORDERED. 3


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Private respondent Milagros Cayas was the registered owner of a Mazda bus with serial No.TA3H4 P-000445 and plate No. PUB-4G-593. 4Said passenger vehicle was insured with PerlaCompania de Seguros, Inc. (PCSI) under policy No. LTO/60CC04241 issued on February 3,1978. 5

On December 17, 1978, the bus figured in an accident in Naic, Cavite injuring several of its

passengers. One of them, 19-year old Edgardo Perea, sued Milagros Cayas for damages in theCourt of First Instance of Cavite, Branch 6docketed as Civil Case No. NC-794; while threeothers, namely: Rosario del Carmen, Ricardo Magsarili and Charlie Antolin, agreed to asettlement of P4,000.00 each with Milagros Cayas.

At the pre-trial of Civil Case No. NC-794, Milagros Cayas failed to appear and hence, she wasdeclared as in default. After trial, the court rendered a decision 7in favor of Perea with itsdispositive portion reading thus:

WHEREFORE, under our present imperatives, judgment is hereby rendered infavor of the plaintiffs and against the defendant Milagros Cayas who is herebyordered to compensate the plaintiff' Edgar Perea with damages in the sum of TenThousand (Pl0,000.00) Pesos for the medical predicament he found himself asdamaging consequences of defendant Milagros Cayas complete lack of diligenceof a good father of a family' when she secured the driving services of one OscarFigueroa on December, 17, 1978; the sum of Ten Thousand (P10,000.00) Pesosfor exemplary damages; the sum of Five Thousand (P5,000.00) Pesos for moraldamages; the sum of Seven Thousand (P7,000.00) Pesos for Attorney's fees,under the imperatives of the monetary power of the peso today;

With costs against the defendant.

SO ORDERED.

When the decision in Civil Case No. NC-794 was about to be executed against her, MilagrosCayas filed a complaint against PCSI in the Office of the Insurance Commissioner praying thatPCSI be ordered to pay P40,000.00 for all the claims against her arising from the vehicularaccident plus legal and other expenses. 8Realizing her procedural mistake, she later withdrewsaid complaint. 9

Consequently, on November 11, 1981, Milagros Cayas filed a complaint for a sum of moneyand damages against PCSI in the Court of First Instance of Cavite (Civil Case No. N-4161). Shealleged therein that to satisfy the judgment in Civil Case No. NC-794, her house and lot werelevied upon and sold at public auction for P38,200; 10that to avoid numerous suits and the"detention" of the insured vehicle, she paid P4,000 to each of the following injured passengers:

Rosario del Carmen, Ricardo Magsarili and Charlie Antolin; that she could not have sufferedsaid financial setback had the counsel for PCSI, who also represented her, appeared at the trialof Civil Case No. NC-794 and attended to the claims of the three other victims; that she soughtreimbursement of said amounts from the defendant, which notwithstanding the fact that herclaim was within its contractual liability under the insurance policy, refused to make such re-imbursement; that she suffered moral damages as a consequence of such refusal, and that shewas constrained to secure the services of counsel to protect her rights. She prayed that

judgment be rendered directing PCSI to pay her P50,000 for compensation of the injuredvictims, such sum as the court might approximate as damages, and P6,000 as attorney's fees.


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In view of Milagros Cayas' failure to prosecute the case, the court motu propio ordered itsdismissal without prejudice. 11 Alleging that she had not received a copy of the answer to thecomplaint, and that "out of sportsmanship", she did not file a motion to hold PCSI in default,Milagros Cayas moved for the reconsideration of the dismissal order. Said motion forreconsideration was acted upon favorably by the court in its order of March 31, 1982.

About two months later, Milagros Cayas filed a motion to declare PCSI in default for its failure tofile an answer. The motion was granted and plaintiff was allowed to adduce evidence ex-parte.On July 13, 1982, the court rendered judgment by default ordering PCSI to pay Milagros CayasP50,000 as compensation for the injured passengers, P5,000 as moral damages and P5,000 asattorney's fees.

Said decision was set aside after the PCSI filed a motion therefor. Trial of the case ensued. Indue course, the court promulgated a decision in Civil Case No. N-4161, the dispositive portionof which was quoted earlier, finding that:

In disavowing its obligation to plaintiff under the insurance policy, defendantadvanced the proposition that before it can be made to pay, the liability must firstbe determined in an appropriate court action. And so plaintiffs liability wasdetermined in that case filed against her by Perea in the Naic CFI. Still, despitethis determination of liability, defendant sought escape from its obligation bypositing the theory that plaintiff Milagros Cayas lost the Naic case due to hernegligence because of which, efforts exerted by defendant's lawyers in protectingCayas' rights proved futile and rendered nugatory. Blame was laid entirely onplaintiff by defendant for losing the Naic case. Defendant labored under theimpression that had Cayas cooperated fully with defendant's lawyers, the lattercould have won the suit and thus relieved of any obligation to Perea Defendant'sposture is stretching the factual circumstances of the Naic case too far. But evenaccepting defendant's postulate, it cannot be said, nor was it shown positivelyand convincingly, that if the Naic case had proceeded on trial on the merits, a

decision favorable to Milagros Cayas could have been obtained. Nor was itdefinitely established that if the pre-trial was undertaken in that case, defendant'slawyers could have mitigated the claim for damages by Perea against Cayas. 12

The court, however, held that inasmuch as Milagros Cayas failed to establish that sheunderwant moral suffering and mental anguish to justify her prayer for damages, there shouldbe no such award. But, there being proof that she was compelled to engage the services ofcounsel to protect her rights under the insurance policy, the court allowed attorney's fees in theamount of P5,000.

PCSI appealed to the Court of Appeals, which, in its decision of May 8, 1987 affirmed in toto thelower court's decision. Its motion for reconsideration having been denied by said appellatecourt, PCSI filed the instant petition charging the Court of Appeals with having erred inaffirming in toto the decision of the lower court.

At the outset, we hold as factual and therefore undeserving of this Court's attention, petitioner'sassertions that private respondent lost Civil Case No. NC-794 because of her negligence andthat there is no proof that the decision in said case has been executed. Said contentions, havingbeen raised and threshed out in the Court of Appeals and rejected by it, may no longer beaddressed to this Court.


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Petitioner's other contentions are primarily concerned with the extent of its liability to privaterespondent under the insurance policy. This, we consider to be the only issue in this case.

Petitioner seeks to limit its liability only to the payment made by private respondent to Perea andonly up to the amount of P12,000.00. It altogether denies liability for the payments made byprivate respondents to the other three (3) injured passengers Rosario del Carmen, Ricardo

Magsarili and Charlie Antolin in the amount of P4,000.00 each or a total of P12,000.00.

There is merit in petitioner's assertions.

The insurance policy involved explicitly limits petitioner's liability to P12,000.00 per person andto P50,000.00 per accident. 13 Pertinent provisions of the policy also state:

SECTION I-Liability to the Public

xxx xxx xxx

3. The Limit of Liability stated in Schedule A as applicable (a) toTHIRD PARTY is the limit of the Company's liability for alldamages arising out of death, bodily injury and damage toproperty combined so sustained as the result of any one accident;(b) "per person" for PASSENGER liability is the limit of theCompany's liability for all damages arising out of death or bodilyinjury sustained by one person as the result of any one accident:(c) "per accident" for PASSENGER liability is, subject to the aboveprovisions respecting per person, the total limit of the Company'sliability for all such damages arising out of death or bodily injurysustained by two or more persons as the result of any oneaccident.

Conditions Applicable to All Sections

xxx xxx xxx

5. No admission, offer, promise or payment shall be made by oron behalf of the insured without the written consent of theCompany which shall be entitled, if it so desires, to take over andconduct in his (sic) name the defense or settlement of any claim,or to prosecute in his (sic) name for its own benefit any claim forindemnity or damages or otherwise, and shall have full discretionin the conduct of any proceedings in the settlement of any claim,

and the insured shall give all such information and assistance asthe Company may require. If the Company shall make anypayment in settlement of any claim, and such payment includesany amount not covered by this Policy, the Insured shall repay theCompany the amount not so covered.

We have ruled in Stokes vs. Malayan Insurance Co., Inc., 14that the terms of the contractconstitute the measure of the insurer's liability and compliance therewith is a conditionprecedent to the insured's right of recovery from the insurer.


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In the case at bar, the insurance policy clearly and categorically placed petitioner's liability for alldamages arising out of death or bodily injury sustained by one person as a result of any oneaccident at P12,000.00. Said amount complied with the minimum fixed by the law thenprevailing, Section 377 of Presidential Decree No. 612 (which was retained by P.D. No. 1460,the Insurance Code of 1978), which provided that the liability of land transportation vehicleoperators for bodily injuries sustained by a passenger arising out of the use of their vehicles

shall not be less than P12,000. In other words, under the law, the minimum liability is P12,000per passenger. Petitioner's liability under the insurance contract not being less than P12,000.00,and therefore not contrary to law, morals, good customs, public order or public policy, saidstipulation must be upheld as effective, valid and binding as between the parties. 15

In like manner, we rule as valid and binding upon private respondent the condition above-quoted requiring her to secure the written permission of petitioner before effecting any paymentin settlement of any claim against her. There is nothing unreasonable, arbitrary or objectionablein this stipulation as would warrant its nullification. The same was obviously designed tosafeguard the insurer's interest against collusion between the insured and the claimants.

In her cross-examination before the trial court, Milagros Cayas admitted, thus:

Atty. Yabut:

q With respect to the other injured passengers of your bus wherein youmade payments you did not secure the consent of defendant (hereinpetitioner) Perla Compania de Seguros when you made those payments?

a I informed them about that

q But they did not give you the written authority that you were supposedto pay those claims?

a No, sir . l6

It being specifically required that petitioner's written consent be first secured before anypayment in settlement of any claim could be made, private respondent is precluded fromseeking reimbursement of the payments made to del Carmen, Magsarili and Antolin in view ofher failure to comply with the condition contained in the insurance policy.

Clearly, the fundamental principle that contracts are respected as the law between thecontracting parties finds application in the present case. 17 Thus, it was error on the part of thetrial and appellate courts to have disregarded the stipulations of the parties and to havesubstituted their own interpretation of the insurance policy. In Phil. American General Insurance

Co., Inc vs. Mutuc,18

we ruled that contracts which are the private laws of the contractingparties should be fulfilled according to the literal sense of their stipulations, if their terms areclear and leave no room for doubt as to the intention of the contracting parties, for contracts areobligatory, no matter what form they may be, whenever the essential requisites for their validityare present.

Moreover, we stated in Pacific Oxygen & Acetylene Co. vs. Central Bank," 19 that the first andfundamental duty of the courts is the application of the law according to its express terms,interpretation being called for only when such literal application is impossible.


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We observe that although Milagros Cayas was able to prove a total loss of only P44,000.00,petitioner was made liable for the amount of P50,000.00, the maximum liability per accidentstipulated in the policy. This is patent error. An insurance indemnity, being merely an assistanceor restitution insofar as can be fairly ascertained, cannot be availed of by any accident victim orclaimant as an instrument of enrichment by reason of an accident. 20

Finally, we find no reason to disturb the award of attorney's fees.

WHEREFORE, the decision of the Court of Appeals is hereby modified in that petitioner shallpay Milagros Cayas the amount of Twelve Thousand Pesos (P12,000. 00) plus legal interestfrom the promulgation of the decision of the lower court until it is fully paid and attorney's fees inthe amount of P5,000.00. No pronouncement as to costs.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortes JJ., concur.

Perla Compania de Seguros, Inc. vs Honorable Court of Appeals and Milagros CayasG.R. No. 78860

May 28, 1990FERNAN,C.J.:FACTS:Milagros Cayas was the registered owner of a Mazda bus. Said passenger vehiclewas in su redwith Perla Compania de Seguros, Inc. (PCSI) under a policy issued on February 3, 1978. OnDecember 17, 1978, the bus figured in an accident in Naic, Cavite injuring several of its passengers. One

of them,19-year old Edgardo Perea, sued Milagros Cayas for damages in the Court of First Instance;while threeothers, namely: Rosario del Carmen, Ricardo Magsarili and Charlie Antolin,agreed to a settlement of P4,000.00 each. At the pre-trial, Milagros Cayas failed to appear

and hence, she was declared as indefault. After trial, the court rendered a decision in favor of Pereato compensate the Perea with damagesof Pl0, 000. 00 for medical fees ; P10, 000.00 for exemplar ydama ges; P5,000.00 for mora l damages;P7,000.00 for Attorney's fees.On November 11, 1981,Milagros Cayas filed a complaint for a sum of money and damagesagainst PCSI in the Court ofFirst Instance. Milagros Cayas filed a motion to declare PCSI in default for its failure to file an answer.The motion was granted and Cayas was allowed to adduce evidenceex-parte.On July 13, 1982, the court rendered judgment by default ordering PCSI to pay Milagros CayasP50,000as compensation for the injured passengers, P5,000 as moral damages and P5,000 as attorney'sfees.Sa id de c i s io n wa s se t a s ide a f t e r t he PCSI f i l e d a mot i on t he re f o r . In duec our s e , t h e c our t promulgated a decision in favor of Cayas, but removed the award of moral

damages.PCSI appealed to the Court of Appeals, which, in its decision of May 8, 1987 the lowercourt'sdecision. Its motion for reconsideration having been denied, PCSI filed the instant petition chargingtheCourt of Appeals with having erred in affirmingin totothe decision of the lower court.ISSUE:Whether or not the amount of award of damages was

proper. RULING: NO.PCSI seeks to li mi t its liabi li ty on ly to the pa ymen t made by Ca yas toPerea and only up to th eamount of P12,000.00. It altogether denies liability for the payments made byCayas to the other three

(3)in ju re d pa s s e nge rs Rosa r io de l Ca rme n , R ic a rdo Ma gsa r i l i a nd Cha r l i e An to l i


24/97

n i n t he a moun t o f P4,000.00 each or a total of P12,000.00.The insurance policy involved explicitlylimits PCSI's liability to P12,000.00 per person and toP50,000.00 per accident.We have ruled in Stokes vs. Malayan Insurance Co., Inc.,that the terms of the contract constitutethe measure of the insurer's liability and compliance therewith is acondition precedent to the insured'sright of recovery from the insurer.In the case at bar, theinsurance policy clearly and categori cally placed PCSI's liabil ity f or al l damages arising out

of death or bodily injury sustained by one person as a result of any one accident atP12,000.00. Saidamount complied with the minimum fixed by the law then prevailing, Section 377 of Presidential Decree

No. 612 (which was retained by P.D. No. 1460, the Insurance Code of 1978),which provided that the liability of land transportation vehicle operators for bodily injuries sustained by a

passenger arising out of the use of their vehicles shall not be less than P12,000. In other words, underthelaw, theminimumliability is P12,000 per passenger. PCSI's li ability under the insurance contract

no t being less than P12,000.00, and therefore not contrary to law, morals, good customs, public order orpublic policy, said stipulation must be upheld as effective, valid and binding as between the parties.In like

manner, we rule as valid and binding upon Cayas the condition in the policy in requiringher to se curethe written permission of PCSI before effecting any payment in settlement of any claim

against her. There is nothing unreasonable, arbitrary or objectionable in this stipulation as wouldwarrantits nullification. The same was obviously designed to safeguard the insurer's interest against

collusion between the insured and the claimants.In her cross-examination before the trial court, MilagrosCayas admitted that PCSI did not giveany written authority that Cayas were supposed to pay thoseclaims.It being specifically required that PCSI's written consent be first secured before any payment

insettlement of any claim could be made, Cayas is precluded from seeking reimbursement of thepaymentsmade to del Carmen, Magsarili and Antolin in view of her failure to comply with the condition

containedin the insurance policy.Clearly, the fundamental principle that contracts are respected as the lawbetween the contracting parties finds application in the present case. Thus, it was error on the part of thetrial and appellate courtsto have disregarded the stipulations of the parties and to have substituted their

own interpretation of theinsurance policy.We observe that although Milagros Cayas was able to prove a

total loss of only P44,000.00, PCSIwas made liable for the amount of P50, 000.00, t he maximumliabi li ty per acc ident st ipulate d in the policy. This is patent error. An insurance indemnity,

being merely an assistance or restitution insofar ascan be fa ir ly asce rta ined, cannot be avai led ofby any accident vict im or cl aimant as an in st rument of enrichment by reason of an

accident.WHEREFORE, the decision of the Court of Appeals is hereby modified in that petitionershall pay Milagros Cayas the amount of Twelve Thousand Pesos (P12,000. 00) plus legal interest from the promulgation of the decision of the lower court until it is fully paid and attorney's fees in the amountof P5,000.00. No pronouncement as to costs.

G.R. No. L-39419 April 12, 1982

MAPALAD AISPORNA, petitioner,vs.THE COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents.


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DE CASTRO, J.:

In this petition for certiorari, petitioner-accused Aisporna seeks the reversal of the decisiondated August 14, 19741 in CA-G.R. No. 13243-CR entitled "People of the Philippines, plaintiff-appellee, vs. Mapalad Aisporna, defendant-appellant" of respondent Court of Appeals affirmingthe judgment of the City Court of Cabanatuan 2rendered on August 2, 1971 which found thepetitioner guilty for having violated Section 189 of the Insurance Act (Act No. 2427, asamended) and sentenced her to pay a fine of P500.00 with subsidiary imprisonment in case ofinsolvency, and to pay the costs.

Petitioner Aisporna was charged in the City Court of Cabanatuan for violation of Section 189 ofthe Insurance Act on November 21, 1970 in an information 3 which reads as follows:

That on or before the 21st day of June, 1969, in the City of Cabanatuan,Republic of the Philippines, and within the jurisdiction of this Honorable Court,the above-named accused, did then and there, wilfully, unlawfully and feloniouslyact as agent in the solicitation or procurement of an application for insurance bysoliciting therefor the application of one Eugenio S. Isidro, for and in behalf ofPerla Compania de Seguros, Inc., a duly organized insurance company,registered under the laws of the Republic of the Philippines, resulting in theissuance of a Broad Personal Accident Policy No. 28PI-RSA 0001 in the amountnot exceeding FIVE THOUSAND PESOS (P5,000.00) dated June 21, 1969,without said accused having first secured a certificate of authority to act as suchagent from the office of the Insurance Commissioner, Republic of the Philippines.

CONTRARY TO LAW.

The facts,

4

as found by the respondent Court of Appeals are quoted hereunder:

IT RESULTING: That there is no debate that since 7 March, 1969 and as of 21June, 1969, appellant's husband, Rodolfo S. Aisporna was duly licensed byInsurance Commission as agent to Perla Compania de Seguros, with license toexpire on 30 June, 1970, Exh. C; on that date, at Cabanatuan City, Personal

Accident Policy, Exh. D was issued by Perla thru its author representative,Rodolfo S. Aisporna, for a period of twelve (12) months with beneficiary as AnaM. Isidro, and for P5,000.00; apparently, insured died by violence during lifetimeof policy, and for reasons not explained in record, present information was filedby Fiscal, with assistance of private prosecutor, charging wife of Rodolfo withviolation of Sec. 189 of Insurance Law for having, wilfully, unlawfully, and

feloniously acted, "as agent in the solicitation for insurance by soliciting thereforethe application of one Eugenio S. Isidro for and in behalf of Perla Compaa deSeguros, ... without said accused having first secured a certificate of authority toact as such agent from the office of the Insurance Commission, Republic of thePhilippines."

and in the trial, People presented evidence that was hardly disputed, thataforementioned policy was issued with active participation of appellant wife ofRodolfo, against which appellant in her defense sought to show that being the


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wife of true agent, Rodolfo, she naturally helped him in his work, as clerk, andthat policy was merely a renewal and was issued because Isidro had called bytelephone to renew, and at that time, her husband, Rodolfo, was absent and soshe left a note on top of her husband's desk to renew ...

Consequently, the trial court found herein petitioner guilty as charged. On appeal, the trial

court's decision was affirmed by the respondent appellate court finding the petitioner guilty of aviolation of the first paragraph of Section 189 of the Insurance Act. Hence, this present recoursewas filed on October 22, 1974. 5

In its resolution of October 28, 1974, 6 this Court resolved, without giving due course to thisinstant petition, to require the respondent to comment on the aforesaid petition. In thecomment 7 filed on December 20, 1974, the respondent, represented by the Office of theSolicitor General, submitted that petitioner may not be considered as having violated Section189 of the Insurance Act. 8 On April 3, 1975, petitioner submitted his Brief9 while the SolicitorGeneral, on behalf of the respondent, filed a manifestation 10 in lieu of a Brief on May 3, 1975reiterating his stand that the petitioner has not violated Section 189 of the Insurance Act.

In seeking reversal of the judgment of conviction, petitioner assigns the followingerrors 11 allegedly committed by the appellate court:

1. THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THATRECEIPT OF COMPENSATION IS NOT AN ESSENTIAL ELEMENT OF THECRIME DEFINED BY THE FIRST PARAGRAPH OF SECTION 189 OF THEINSURANCE ACT.

2. THE RESPONDENT COURT OF APPEALS ERRED IN GIVING DUEWEIGHT TO EXHIBITS F, F-1, TO F-17, INCLUSIVE SUFFICIENT TOESTABLISH PETITIONER'S GUILT BEYOND REASONABLE DOUBT.

3. THE RESPONDENT COURT OF APPEALS ERRED IN NOT ACQUITTINGHEREIN PETITIONER.

We find the petition meritorious.

The main issue raised is whether or not a person can be convicted of having violated the firstparagraph of Section 189 of the Insurance Act without reference to the second paragraph of thesame section. In other words, it is necessary to determine whether or not the agent mentionedin the first paragraph of the aforesaid section is governed by the definition of an insurance agentfound on its second paragraph.

The pertinent provision of Section 189 of the Insurance Act reads as follows:

No insurance company doing business within the Philippine Islands, nor anyagent thereof, shall pay any commission or other compensation to any person forservices in obtaining new insurance, unless such person shall have first procuredfrom the Insurance Commissioner a certificate of authority to act as an agent ofsuch company as hereinafter provided. No person shall act as agent, sub-agent,or broker in the solicitation of procurement of applications for insurance, orreceive for services in obtaining new insurance, any commission or other


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compensation from any insurance company doing business in the PhilippineIslands, or agent thereof, without first procuring a certificate of authority so to actfrom the Insurance Commissioner, which must be renewed annually on the firstday of January, or within six months thereafter. Such certificate shall be issuedby the Insurance Commissioner only upon the written application of personsdesiring such authority, such application being approved and countersigned by

the company such person desires to represent, and shall be upon a formapproved by the Insurance Commissioner, giving such information as he mayrequire. The Insurance Commissioner shall have the right to refuse to issue orrenew and to revoke any such certificate in his discretion. No such certificateshall be valid, however, in any event after the first day of July of the yearfollowing the issuing of such certificate. Renewal certificates may be issued uponthe application of the company.

Any person who for compensation solicits or obtains insurance on behalf of anyinsurance company, or transmits for a person other than himself an applicationfor a policy of insurance to or from such company or offers or assumes to act inthe negotiating of such insurance, shall be an insurance agent within the intent of

this section, and shall thereby become liable to all the duties, requirements,liabilities, and penalties to which an agent of such company is subject.

Any person or company violating the provisions of this section shall be fined inthe sum of five hundred pesos. On the conviction of any person acting as agent,sub-agent, or broker, of the commission of any offense connected with thebusiness of insurance, the Insurance Commissioner shall immediately revoke thecertificate of authority issued to him and no such certificate shall thereafter beissued to such convicted person.

A careful perusal of the above-quoted provision shows that the first paragraph thereof prohibitsa person from acting as agent, sub-agent or broker in the solicitation or procurement of

applications for insurance without first procuring a certificate of authority so to act from theInsurance Commissioner, while its second paragraph defines who is an insurance agent withinthe intent of this section and, finally, the third paragraph thereof prescribes the penalty to beimposed for its violation.

The respondent appellate court ruled that the petitioner is prosecuted not under the secondparagraph of Section 189 of the aforesaid Act but under its first paragraph. Thus

... it can no longer be denied that it was appellant's most active endeavors thatresulted in issuance of policy to Isidro, she was there and then acting as agent,and received the pay thereof her defense that she was only acting as helper ofher husband can no longer be sustained, neither her point that she received nocompensation for issuance of the policy because

any person who for compensation solicits or obtains insurance onbehalf of any insurance company or transmits for a person otherthan himself an application for a policy of insurance to or fromsuch company or offers or assumes to act in the negotiating ofsuch insurance, shall be an insurance agent within the intent ofthis section, and shall thereby become liable to all the duties,


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whole. The particular words, clauses and phrases should not be studied as detached andisolated expressions, but the whole and every part of the statute must be considered in fixingthe meaning of any of its parts and in order to produce harmonious whole. 13 A statute must beso construed as to harmonize and give effect to all its provisions whenever possible. 14 Themeaning of the law, it must be borne in mind, is not to be extracted from any single part, portionor section or from isolated words and phrases, clauses or sentences but from a general

consideration or view of the act as a whole. 15 Every part of the statute must be interpreted withreference to the context. This means that every part of the statute must be considered togetherwith the other parts, and kept subservient to the general intent of the whole enactment, notseparately and independently. 16 More importantly, the doctrine of associated words (Noscitur aSociis) provides that where a particular word or phrase in a statement is ambiguous in itself or isequally susceptible of various meanings, its true meaning may be made clear and specific byconsidering the company in which it is found or with which it is associated. 17

Considering that the definition of an insurance agent as found in the second paragraph is alsoapplicable to the agent mentioned in the first paragraph, to receive a compensation by the agentis an essential element for a violation of the first paragraph of the aforesaid section. Theappellate court has established ultimately that the petitioner-accused did not receive any

compensation for the issuance of the insurance policy of Eugenio Isidro. Nevertheless, theaccused was convicted by the appellate court for, according to the latter, the receipt ofcompensation for issuing an insurance policy is not an essential element for a violation of thefirst paragraph of Section 189 of the Insurance Act.

We rule otherwise. Under the Texas Penal Code 1911, Article 689, making it a misdemeanor forany person for direct or indirect compensation to solicit insurance without a certificate ofauthority to act as an insurance agent, an information, failing to allege that the solicitor was toreceive compensation either directly or indirectly, charges no offense. 18 In the case of Bolen vs.Stake, 19 the provision of Section 3750, Snyder's Compiled Laws of Oklahoma 1909 is intendedto penalize persons only who acted as insurance solicitors without license, and while acting insuch capacity negotiated and concluded insurance contracts for compensation. It must be noted

that the information, in the case at bar, does not allege that the negotiation of an insurancecontracts by the accused with Eugenio Isidro was one for compensation. This allegation isessential, and having been omitted, a conviction of the accused could not be sustained. It iswell-settled in Our jurisprudence that to warrant conviction, every element of the crime must bealleged and proved. 20

After going over the records of this case, We are fully convinced, as the Solicitor Generalmaintains, that accused did not violate Section 189 of the Insurance Act.

WHEREFORE, the judgment appealed from is reversed and the accused is acquitted of thecrime charged, with costs de oficio.

SO ORDERED.

Teehankee (Acting C.J.,) Makasiar, De Castro, Fernandez, Guerrero and Melencio-Herrera, JJ.,concur.

Plana, J., took no part.


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prosecuted not under the second paragraph of Section 189 but under its first paragraph is a

reversible error, as the definition of insurance agent in paragraph 2 applies to the paragraph 1

and 2 of Section 189, which is any person who for compensation shall be an insurance agent

within the intent of this section. Without proof of compensation, directly or indirectly, received

from the insurance policy or contract, Mapalad Aisporna may not be held to have violated

Section 189 of the Insurance Act. Under the Texas Penal Code 1911, Article 689, making it a

misdemeanor for any person for direct or indirect compensation to solicit insurance without a

certificate of authority to act as an insurance agent, an information, failing to allege that the

solicitor was to receive compensation either directly or indirectly, charges no offense. In the

case of Bolen vs. Stake,19 the provision of Section 3750, Snyder's Compiled Laws of Oklahoma

1909 is intended to penalize persons only who acted as insurance solicitors without license, and

while acting in such capacity negotiated and concluded insurance contracts for compensation. It

must be noted that the information, in the case at bar, does not allege that the negotiation of an

insurance contracts by the accused with Eugenio Isidro was one for compensation. This

allegation is essential, and having been omitted, a conviction of the accused could not be

sustained. It is well-settled in our jurisprudence that to warrant conviction, every element of the

crime must be alleged and proved. After going over the records of this case, we are fully

convinced, as the Solicitor General maintains, that accused did not violate Section 189 of the

Insurance Act.

G.R. No. L-15895

RAFAEL ENRIQUEZ, as administrator of the estate of the late Joaquin Ma. Herrer, plaintiff-

appellant,

vs.

SUN LIFE ASSURANCE COMPANY OF CANADA, defendant-appellee.

Jose A. Espiritu for appellant.Cohn, Fisher and DeWitt for appellee.

Malcolm, J.:

This is an action brought by the plaintiff ad administrator of the estate of the late Joaquin Ma.

Herrer to recover from the defendant life insurance company the sum of pesos 6,000 paid by

the deceased for a life annuity. The trial court gave judgment for the defendant. Plaintiff

appeals.


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The undisputed facts are these: On September 24, 1917, Joaquin Herrer made application to

the Sun Life Assurance Company of Canada through its office in Manila for a life annuity. Two

days later he paid the sum of P6,000 to the manager of the companys Manila office and was

given a receipt reading as follows:

MANILA, I. F., 26 de septiembre, 1917.

PROVISIONAL RECEIPT Pesos 6,000

Recibi la suma de seis mil pesos de Don Joaquin Herrer de Manila como prima dela Renta

Vitalicia solicitada por dicho Don Joaquin Herrer hoy, sujeta al examen medico y aprobacion de

la Oficina Central de la Compaia.

The application was immediately forwarded to the head office of the company at Montreal,

Canada. On November 26, 1917, the head office gave notice of acceptance by cable to Manila.

(Whether on the same day the cable was received notice was sent by the Manila office of Herrer

that the application had been accepted, is a disputed point, which will be discussed later.) OnDecember 4, 1917, the policy was issued at Montreal. On December 18, 1917, attorney Aurelio

A. Torres wrote to the Manila office of the company stating that Herrer desired to withdraw his

application. The following day the local office replied to Mr. Torres, stating that the policy had

been issued, and called attention to the notification of November 26, 1917. This letter was

received by Mr. Torres on the morning of December 21, 1917. Mr. Herrer died on December 20,

1917.

As above suggested, the issue of fact raised by the evidence is whether Herrer received notice

of acceptance of his application. To resolve this question, we propose to go directly to the

evidence of record.

The chief clerk of the Manila office of the Sun Life Assurance Company of Canada at the time of

the trial testified that he prepared the letter introduced in evidence as Exhibit 3, of date

November 26, 1917, and handed it to the local manager, Mr. E. E. White, for signature. The

witness admitted on cross-examination that after preparing the letter and giving it to he

manager, he new nothing of what became of it. The local manager, Mr. White, testified to having

received the cablegram accepting the application of Mr. Herrer from the home office on

November 26, 1917. He said that on the same day he signed a letter notifying Mr. Herrer of this

acceptance. The witness further said that letters, after being signed, were sent to the chief clerk

and placed on

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